UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

March 2, 2021

Date of Report

(Date of earliest event reported)

IRIDEX CORPORATION

(Exact name of Registrant as specified in its charter)

1212 Terra Bella Avenue

Mountain View, California 94043

(Address of principal executive offices) (Zip code)

(650) 940-4700

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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Item 1.01. Entry into a Material Definitive Agreement.

On March 2, 2021 (the “Agreement Date”), IRIDEX Corporation (the “Company”) entered into a series of strategic transactions with Topcon Corporation (“Topcon”), Topcon America Corporation (the “Investor”) and Topcon Medical Laser Systems, Inc. (the “Seller”), pursuant to which (i) the Company and the Seller entered into an asset purchase agreement dated March 2, 2021, in which the Company plans to acquire substantially all the assets (except for cash and cash equivalents) of the Seller (the “Transferred Assets”) (the “Asset Purchase Agreement”), (ii) Topcon and the Company entered into a distribution agreement dated March 2, 2021, pursuant to which the Company granted Topcon the exclusive right to distribute the Company’s retina and glaucoma products in certain geographies outside the United States (the “Distribution Agreement”), (iii) pursuant to an investment agreement dated March 2, 2021 (the “Investment Agreement”) the Investor agreed to acquire a number of shares of the Company’s Common Stock for an aggregate purchase price of $10 million, provided that the total number of shares of Common Stock acquired shall not exceed 19.9% of the outstanding shares of Common Stock prior to the purchase (the “Shares”) and (iv) the Company and Investor entered into a registration rights agreement dated March 2, 2021 (the “Registration Rights Agreement”) with respect to the registration of the Shares for resale.

Pursuant to the Asset Purchase Agreement, the Transferred Assets include substantially all of the Seller’s assets including the rights to the Seller’s PASCAL product.  The Company will assume only those liabilities arising after the closing in connection with the Transferred Assets.  In the Asset Purchase Agreement, the Company and the Seller made certain customary representations and warranties and agreed to certain customary covenants. The Agreement provides that the Company and the Seller will each indemnify the other for losses arising from certain breaches of the Agreement and for certain other liabilities subject to customary caps and deductibles.  The Company plans to offer employment to certain of the employees of the Seller and sublease the Seller’s current Livermore facility from Topcon.  The Closing is expected to occur during the first quarter of 2021 pending the satisfaction of certain customary closing conditions.

Pursuant to the Distribution Agreement, the Company agreed to appoint Topcon as exclusive distributor of the Company’s glaucoma and retina products, including Seller’s PASCAL product, in certain countries outside of the United States.  Topcon agreed to use commercially reasonable efforts to commercialize the Company’s products in each region throughout the territory, including achieving certain sales baselines by product category and region.  If Topcon fails to achieve the baselines in a region, the Company shall have the right to subject to payment of a fee, terminate Topcon’s appointment in such region. The Distribution Agreement and Topcon’s appointment will, unless terminated earlier, continue on a country-by-country basis for a period of ten (10) years from the date exclusivity is granted.  The Distribution Agreement includes customary termination rights and effects of termination, including a termination for convenience right in favor of Topcon and, subject to payment of a fee, a termination right in favor of the Company upon a change of control of the Company. The net proceeds to the Company from the transactions reflected in the Asset Purchase Agreement and the Distribution Agreement are $9.5 million.

 

Pursuant to the Investment Agreement, the Company plans to issue the Shares for up to $10 million to the Investor simultaneous with the closing of the Asset Purchase Agreement.  The purchase price for the Shares shall be equal to the five-day weighted average closing price of the Company stock on the Nasdaq Global Market and the Shares will be subject to a six-month lockup.  In the six months following the purchase of the Shares, the Investor shall have the right to participate on a pro rata basis in subsequent issuances of Common Stock or equivalents by the Company or any of its subsidiaries.  Pursuant to the Registration Rights Agreement the Company has committed to register the Shares for resale within the same period of time and there are standard penalty provisions if the Company fails to register the Shares for resale within such period.  The Investment Agreement and the Registration Rights Agreement are subject to customary representations and warranties, covenants and indemnification provisions.

The foregoing descriptions do not purport to be complete and are qualified in their entirety by reference to the Asset Purchase Agreement, the Distribution Agreement, the Investment Agreement and the Registration Rights Agreement, which are attached hereto as Exhibit 10.1, Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4, respectively, and incorporated herein by reference.

 

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On dated March 2, 2021 the Company issued a press release announcing the above transactions.   A copy of the press release is attached hereto as Exhibit 99.1.

 

Item 7.01. Regulation FD Disclosure.

 

Attached hereto as Exhibit 99.2 is a Collaboration Presentation used by the Company in connection with the transactions described above.

 

This information is intended to be furnished under Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Forward Looking Statements.

 

This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These statements include statements made about the transactions described above. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties, many of which are beyond our control, include risks described in the section entitled Risk Factors and elsewhere in our filing made with the Securities and Exchange Commission in Iridex’s Quarterly Report on Form 10-Q filing made with the Securities and Exchange Commission on November 10, 2020. These forward-looking statements speak only as of the date hereof and should not be unduly relied upon. Iridex disclaims any obligation to update these forward-looking statements. All forward-looking statements in this document are qualified in their entirety by this cautionary statement.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

 

† Portions of this exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

 

 

 

 

 

 

 

 

 

 

 

ASSET PURCHASE AGREEMENT

 

among

 

IRIDEX CORPORATION

 

TOPCON MEDICAL LASER SYSTEMS, INC.

 

AND

 

TOPCON AMERICA CORPORATION (solely for the purpose of Section 11.15) March 2, 2021

 

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TABLE OF CONTENTS

 

Page

 

ARTICLE I TRANSFER OF ASSETS ................................................................................................ 2

1.1Asset Transfer ............................................................................................................. 2

1.2Company Liabilities; Post-Closing Acquiror Liabilities ............................................ 5

1.3Non-Transferable Assets............................................................................................. 6

 

ARTICLE II CLOSING AND CLOSING PAYMENTS ..................................................................... 7

2.1The Closing................................................................................................................. 7

2.2Payment of Consideration........................................................................................... 10

2.3Intentionally Omitted .................................................................................................. 10

2.4Allocation of Consideration ........................................................................................ 10

2.5Transfer Taxes ............................................................................................................ 10

2.6Withholding Taxes...................................................................................................... 10

 

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY .......................... 10

3.1Organization and Good Standing................................................................................ 10

3.2Authority and Enforceability ...................................................................................... 11

3.3Title to and Condition of Transferred Assets.............................................................. 11

3.4Governmental Approvals ............................................................................................ 12

3.5Conflicts...................................................................................................................... 12

3.6Company Financial Statements................................................................................... 12

3.7Intentionally Omitted .................................................................................................. 12

3.8Absence of Certain Changes ....................................................................................... 12

3.9Tax Matters ................................................................................................................. 12

3.10Real Property .............................................................................................................. 13

3.11Intellectual Property.................................................................................................... 13

3.12Material Contracts....................................................................................................... 17

3.13Employee Benefit Plans .............................................................................................. 18

3.14Employment Matters................................................................................................... 19

3.15Permits ........................................................................................................................ 20

3.16Litigation..................................................................................................................... 20

3.17Insurance ..................................................................................................................... 20

3.18Compliance with Laws ............................................................................................... 20

3.19Company Customers and Suppliers ............................................................................ 21

3.20Interested Party Transactions ...................................................................................... 21

3.21Books and Records ..................................................................................................... 21

3.22No Broker ................................................................................................................... 22

3.23Product Warranties. .................................................................................................... 22

3.24Regulatory Matters ..................................................................................................... 22

3.25No Other Representations and Warranties.................................................................. 23

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ACQUIROR .................................. 23

4.1Organization and Standing.......................................................................................... 23

4.2Authority and Enforceability ...................................................................................... 23

4.3Conflicts...................................................................................................................... 23

4.4No Broker ................................................................................................................... 24

 

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TABLE OF CONTENTS

 

 

4.5Litigation..................................................................................................................... 24

4.6Governmental Approvals ............................................................................................ 24

4.7Sufficiency of Funds ................................................................................................... 24

4.8Solvency...................................................................................................................... 24

4.9Non-Reliance .............................................................................................................. 24

 

ARTICLE V LICENSE ....................................................................................................................... 24

5.1Licenses to Acquiror ................................................................................................... 24

5.2Disposals and Waivers ................................................................................................ 25

5.3Non-Assertion ............................................................................................................. 25

5.4License Term .............................................................................................................. 25

 

ARTICLE VI CONDUCT OF COMPANY BUSINESS ..................................................................... 25

6.1Conduct of Company Business ................................................................................... 25

6.2Restrictions on Company Activities ........................................................................... 26

 

ARTICLE VII APPROVALS AND NON-SOLICITATION AGREEMENTS ................................... 27

7.1Termination of Discussions ........................................................................................ 27

7.2No Solicitation ............................................................................................................ 28

7.3Notice of Alternative Transaction Proposals .............................................................. 28

 

ARTICLE VIII ADDITIONAL AGREEMENTS ................................................................................ 28

8.1Third Party Consents .................................................................................................. 28

8.2Commercially Reasonable Efforts to Close ................................................................ 28

8.3Ellex Dispute............................................................................................................... 28

8.4Employee Matters ....................................................................................................... 29

8.5COBRA Continuation Coverage................................................................................. 30

8.6Tax Matters ................................................................................................................. 31

8.7Expenses ..................................................................................................................... 31

8.8Release of Liens.......................................................................................................... 31

8.9Access to Information ................................................................................................. 31

8.10Notification of Certain Matters ................................................................................... 32

8.11Post-Closing Manufacturing Cooperation .................................................................. 32

8.12Post-Signing Contract ................................................................................................. 32

8.13Parts ............................................................................................................................ 33

8.14Post-Closing Sales ...................................................................................................... 33

8.15Non-Solicitation and Non-Competition ...................................................................... 33

 

ARTICLE IX POST-CLOSING INDEMNIFICATION ...................................................................... 34

9.1Survival ....................................................................................................................... 34

9.2Indemnification Rights ............................................................................................... 35

9.3General Indemnification Provisions ........................................................................... 36

9.4Limitations on Indemnification................................................................................... 37

9.5Claim Procedures ........................................................................................................ 37

9.6Third Party Claims...................................................................................................... 39

9.7General Release for Claims Relating to Retention, Solicitation or Hiring ................. 40

 

ARTICLE X PRE-CLOSING TERMINATION .................................................................................. 40

 

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TABLE OF CONTENTS

 

 

10.1Termination of this Agreement ................................................................................... 40

10.2Effect of Termination.................................................................................................. 41

 

ARTICLE XI GENERAL PROVISIONS ............................................................................................ 41

11.1Certain Interpretations; Definitions ............................................................................ 41

11.2Notices ........................................................................................................................ 41

11.3Confidentiality ............................................................................................................ 42

11.4Public Disclosure ........................................................................................................ 43

11.5Amendment................................................................................................................. 43

11.6Extension and Waiver ................................................................................................. 43

11.7Assignment ................................................................................................................. 43

11.8Severability ................................................................................................................. 43

11.9Specific Performance and Other Remedies ................................................................ 44

11.10Governing Law ........................................................................................................... 44

11.11Dispute Resolution...................................................................................................... 44

11.12Waiver of Jury Trial.................................................................................................... 44

11.13Entire Agreement ........................................................................................................ 44

11.14Counterparts................................................................................................................ 45

11.15Guarantee by Guarantor .............................................................................................. 45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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INDEX OF ANNEXES, EXHIBITS AND SCHEDULES

 

 

AnnexDescription

 

Annex ACertain Defined Terms

 

ExhibitDescription

 

Exhibit AForm of Distribution Agreement Exhibit BForm of Investment Agreement Exhibit CForm of Livermore Sublease

Exhibit DForm of Assignment and Assumption Agreement and Bill of Sale

Exhibit EForm of Patent Assignment Agreement

Exhibit FForm of Trademark Assignment Agreement

Exhibit GTerm Sheet for Manufacturing Services Agreement

 

 

 

 

Disclosure Schedule

 

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ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of March 2, 2021 (the “Agreement Date”) by and between IRIDEX Corporation, a Delaware corporation (“Acquiror”), and Topcon Medical Laser Systems, Inc., a California corporation (the “Company”, and collectively with Acquiror, the “Parties”), and, solely for the purpose of Section 11.15, Topcon America Corporation, a Delaware corporation (“Guarantor”).

 

WITNESSETH

 

WHEREAS, the Company is engaged in and operates the Business (as defined below).

 

WHEREAS, Topcon Corporation (“Topcon”), an Affiliate of the Company, and Acquiror desire to enter into a series of strategic transactions, pursuant to which (i) Acquiror acquires the Business, (ii) Guarantor acquires certain equity interests of Acquiror pursuant to an Investment Agreement between Guarantor and Acquiror dated on or around the Agreement Date (the “Investment Agreement”), (iii) Topcon and Acquiror enter into a distribution agreement (the “Distribution Agreement”) pursuant to which Acquiror grants Topcon the exclusive right to distribute certain of Acquiror’s products (including products of the Company, such as PASCAL, after the Closing) in certain regions (the “Exclusive Distribution Rights”) and (iv) Topcon and Acquiror enter into the Manufacturing Services Agreement regarding transition of regulatory authorizations relating to, and manufacturing and supply of, the Business Products for a certain transition period after the Closing.

 

WHEREAS, in connection with the above, Acquiror desires to purchase, and the Company desires to sell to Acquiror, the Business and, in connection therewith, the Company wishes to transfer, free and clear of all Liens, to Acquiror, and the Acquiror wishes to accept, all of the Company’s respective right, title and interest in and to the Transferred Assets and Post-Closing Acquiror Liabilities, in exchange for the consideration set forth below (such transaction, the “Asset Purchase”).

 

WHEREAS, the respective boards of directors of each of Acquiror and the Company believe that it is advisable and in the best interests of each corporation and their respective stockholders that Acquiror acquire the Transferred Assets and, in furtherance thereof, have approved this Agreement and the applicable Transactions.

 

WHEREAS, as a condition and inducement to Acquiror’s willingness to enter into this Agreement, concurrently herewith, the Company has entered into the Distribution Agreement and the Investment Agreement, each of which will be effective only upon the Closing.

 

NOW, THEREFORE, in consideration of the mutual agreements, covenants and other premises set forth herein, the mutual benefits to be gained by the performance thereof, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, the parties hereby agree as follows:

 

ARTICLE I TRANSFER OF ASSETS

 

1.1Asset Transfer.

 

(a)       Transfer of Transferred Assets. Upon the terms and subject to the conditions contained in this Agreement, at the Closing, the Company will irrevocably and perpetually convey, transfer, novate, assign and deliver to Acquiror, free and clear of all Liens, and Acquiror will acquire all of the Company’s right, title and interest in and to the Transferred Assets. For purposes of this Agreement, “Transferred Assets” means all Assets of the Company used in, held for use in, necessary for, or related to the conduct or operation of the Business, or otherwise contemplated to be transferred to Acquiror pursuant to this

 

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Agreement, including the following assets of the Company, in each case to the extent permissible under applicable Law:

 

(i)all Transferred IP;

 

(ii)all Transferred IP / Technology-Related Documentation; (iii)all Transferred Tangible Assets;

(iv)all Transferred Contracts, and all rights of the Company under or related to any

Transferred Contract;

 

(v)all Business Permits;

 

(vi)       all originals, or where not available, copies of all Books and Records (to the extent available) used in, held for use in, necessary for or related to the Business, the Transferred Assets or the Transferring Employees, other than the Excluded Books and Records;

 

(vii)     (A) all rights, title, and interests, but not the obligations or Liabilities, under any confidentiality agreement, non-disclosure, non-competition, non-solicitation, or invention assignment, or similar agreements entered into with any Employees to extent that (x) such rights (or portion thereof) relate to the Transferred IP, the Business Products, or the Business and (y) such agreements are in effect as of the Agreement Date, and (B) all right, title and interest, but not the obligations, under any confidentiality, invention assignment, or similar agreements with any Employees who have performed services in connection with or related to the Business to the extent such agreements are in effect as of the Agreement Date (“Employee Assignment Agreements”), and to the extent required to permit Acquiror to enjoin, restrain, recover damages from, or obtain any other remedies available at law or equity from or against, and to obtain specific performance of such Employee Assignment Agreement by, any Employee who breaches any Employee Assignment Agreement (including any confidentiality provisions relating to the Business or Transferred Assets) in connection with Acquiror’s protection of its rights and interests in connection with the Business or the Transferred Assets, in each case, to the extent necessary to permit Acquiror to protect its rights and interests in connection with the Business and the Transferred Assets and the Transactions;

 

(viii)     all rights, title, and interests to any Action arising out of or related to any other Transferred Asset, in each case, whether known or unknown, contingent or noncontingent, and whether arising out of actions or conditions occurring prior to, on or after the Closing Date, and other than to the extent related to an Excluded Asset or a Company Liability (such excluded items, the “Excluded Action Rights”);

 

(ix)       all insurance benefits, including rights and proceeds arising from or in any way relating to any other Transferred Asset to the extent arising prior to the Closing, in each case, other than to the extent related to an Excluded Asset or a Company Liability (such excluded items, the “Excluded Insurance Benefits”);

 

(x)       all rights to enforce such right, title and interest, including the right to sue and recover any sums whether due, payable, accrued or arising before, on or after the Closing with respect to any other Transferred Asset, in each case, other than to the extent related to an Excluded Asset or a Company Liability (such excluded items, the “Excluded Enforcement Rights”); and

 

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(xi)all goodwill in or associated with the Transferred Asset or the Business

 

provided, however, that, notwithstanding anything to the contrary contained herein and for the avoidance of doubt, the Transferred Assets shall not include, and the Company shall not convey, transfer, novate, assign or deliver, and Acquiror expressly understands and agrees that it shall not receive or acquire, any right, title or interest in or to any Excluded Asset.

 

(b)Further Assurances.

 

(i)       Post-Closing Cooperation. For a period of six (6) months after the Closing, at Acquiror’s reasonable written request, the Company shall use its commercially reasonable efforts to execute and deliver to Acquiror such other instruments of sale, transfer, conveyance, assignment and confirmation and such materials and information and take such other actions as reasonably necessary in order to transfer, novate, convey and assign to Acquiror, and to confirm Acquiror’s right, title, and interest to, all of the Transferred Assets in accordance with this Agreement, in each case to the fullest extent permitted by applicable Law and confidentiality obligations owed by the Company or its Affiliates to any third party, to assist Acquiror in acquiring actual possession and operating control of the Transferred Assets, and to assist Acquiror in exercising all rights with respect thereto and enabling the perfection of Acquiror’s ownership of the Transferred Assets and the registration, recordation, prosecution, enforcement of the Transferred IP and any other matters relating to the use of the Transferred Assets; provided, that any costs associated with the actions undertaken by the Company pursuant to this Section 1.1(b)(i) shall be borne equally by the Parties.

 

(ii)       Non-Retention and Removal of Software and Technology. The Company shall not intentionally or Knowingly, following the Closing, retain any copies or embodiments of any Software or Technology that constitute Transferred Assets, except to the extent such retention or copies are required under applicable Law or for the Company or its Affiliates to fulfill its obligations under this Agreement or any other Related Agreements, and the Company shall, to the extent of its Knowledge and to the extent practically possible, remove all copies of such Software or Technology from any and all computers or other similar machines retained by the Company; provided, that nothing herein shall require the Company or its Affiliates to remove any information required to be retained pursuant to applicable Law or bona fide internal record retention policies.

 

(iii)       License Fees. Acquiror acknowledges that the Transferred Contracts include the right by the Company to receive certain licensing fees and/or payments from third parties in connection with such third parties’ use of certain Transferred IP (such licensing fees, the “Licensing Fees Payable”). If Acquiror receives any payments in connection with the Licensing Fees Payable after the Closing, and such payments relate to the use of any Transferred IP by the relevant third party during the period prior to the Closing, amount of which are not fully received by the Company prior to the Closing, Acquiror shall pay or cause to be paid the Company or its designee the full amount of the Licensing Fees Payable to the extent relevant to the period prior to the Closing promptly upon Acquiror’s receipt of such amounts.

 

(c)       Access to Information. Acquiror and the Company shall, for a period of six (6) years following the Closing, (i) retain books and records of the Business relating to periods prior to the Closing (the “Information”) in a manner reasonably consistent with past practices, and (ii) afford the other party and its Affiliates and each of their Representatives upon reasonable advance written request, and at the other party’s expense, reasonable access to such Information during normal business hours and in such manner as not to interfere with the conduct of the business of such other party; provided, however, that neither party shall be obligated to provide the other party with access to any such Information where such access would violate any Law or confidentiality obligations owed by such party. Requests for Information

 

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may be made by the Parties under this Section 1.1(c) for financial reporting and accounting matters or preparing financial statements, preparing and filing of any Tax Returns, prosecuting any claims for any Tax refund, defending any Tax claims or assessment, preparing securities law or securities exchange filings, compliance with the requirements of any Governmental Entity prosecuting, defending or settling any actual or threatened Action or insurance claim and all other reasonable purposes, and by the Company in order to facilitate the resolution of any claims made by or against or incurred by Acquiror after the Closing, or for any other reasonable purpose, in each case, as related to the Transferred Assets, Post-Closing Acquiror Liabilities and/or the Business, and performing obligations under this Agreement and the Related Agreements; provided, however, that such other party shall not be obligated to provide any Information that would result in the loss of the attorney-client privilege with respect thereto, provided, further, that, in such case, such party shall use commercially reasonable efforts to establish a process that, through use of steps such as targeted redactions and provision of information to counsel and summaries for the other party or other similar means, will provide such other party timely access to the fullest extent practicable. Each of Acquiror and the Company shall keep confidential and not disclose any information learned as a result of any examination conducted pursuant to this Section 1.1(c) to any other Person without the prior written consent of the other party unless (A) the disclosure is required by Law or legal process such as in response to legal order or subpoena; or (B) the terms are readily ascertainable from public or published information (without violation of the foregoing provisions of this sentence).

 

(d)       Mis-Allocation of Transferred Assets.   Subject to the terms and conditions of this Agreement and the Related Agreements, in the event that (x) Acquiror discovers after the Closing that it is the owner of, received or otherwise came to possess any Excluded Asset (including the receipt of any mail and payments received that do not relate to the Transferred Assets or the Business to which the Company is entitled) or (y) the Company discovers after Closing that it, or its Affiliates, are the owners of, received or otherwise came to possess any Transferred Asset, such party shall, or shall cause its Affiliates to, convey such asset as promptly as practicable, at no cost, to the party so entitled thereto in accordance with this Agreement (and the relevant party will cause such entitled party to accept such asset or assume such liability).

 

1.2       Company Liabilities; Post-Closing Acquiror Liabilities.

 

(a)       Company Excluded Liabilities. Notwithstanding anything to the contrary in this Agreement, in connection with the consummation of the Transactions, none of Acquiror or any of its Representatives shall assume or have any responsibility for, or shall be deemed to have assumed or have any responsibility for, any Company Liability. For purposes of this Agreement, “Company Liability” means any Liability incurred by the Company prior to the Closing Date, including:

 

(i)         any liabilities arising out of or relating to the Company’s ownership or operation of (x) the Transferred Assets and the Business prior to the Closing Date or (y) the Excluded Assets,

 

(ii)       any Liability with respect to any Action pending or, to the Knowledge of the Company, threatened against the Company as of the Closing arising from, related to, in connection with, or to enforce any Customer Contract (collectively, “Known Customer Liabilities”),

 

(iii)       subject to Section 8.4(d), the employment Liabilities of the Company, including any such employment Liabilities that (A) solely by virtue of applicable Law, constitute Liabilities of Acquiror after the Closing, and (B) in the absence of such Law, would constitute Liabilities of the Company after the Closing,

 

(iv)any Third Party Expenses,

 

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(v)any Indebtedness,

 

(vi)any Liability relating to the Ellex Dispute;

 

(vii)     any Liability relating to non-compliance with any applicable bulk sale or bulk transfer laws of any jurisdiction in connection with the sale and transfer of the Transferred Assets in existence prior to the Closing,

 

(viii)     any Liability with respect to the closure of the TMLS facility located at 2526 Qume Drive, Suite 16, San Jose, California leased from Wennex, LLC (the “San Jose Lessor”) pursuant to that certain Standard Industrial/Commercial Multi-Tenant Lease – Gross between the Company and the San Jose Lessor dated June 30, 2016;

 

(ix)       (A) any Liability for Taxes, other than Transfer Taxes allocated to the Acquiror pursuant to Section 2.5, arising from or attributable to the Business or the use or ownership of the Transferred Assets for all taxable periods (or portions thereof) ending on or prior to the Closing Date and any other Taxes of the Company, other than Transfer Taxes allocated to the Acquiror pursuant to Section 2.5, (B) any Liability for Taxes as a result of any obligation of the Company to indemnify any other Person with respect to Taxes as owed by the Company prior to the Closing, and (C) any Transfer Taxes allocated to the Company pursuant to Section 2.5, and

 

(x)       The Company shall be responsible for, and satisfy and discharge when due, the Company Liabilities and shall be responsible for and indemnify and hold harmless Acquiror and its Affiliates with respect to, any such Company Liabilities.

 

(b)       Post-Closing Acquiror Liabilities. Notwithstanding anything to the contrary in this Agreement, at the Closing, Acquiror shall assume all Post-Closing Acquiror Liabilities. For purposes of this Agreement, the “Post-Closing Acquiror Liabilities” means:

 

(i)         all Liabilities to the extent relating to the Transferred Assets, but only to the extent that such Liabilities arise on or after the Closing,

 

(ii)       all Liabilities to the extent relating to or arising out of the Customer Contracts (excluding Known Customer Liabilities, which, for the avoidance of doubt, shall be Company Liabilities for all purposes under this Agreement),

 

(iii)       all Liabilities relating to employee benefits, compensation or other arrangements with respect to any Business Employee arising after the Closing,

 

(iv)     all Liabilities or obligations for Taxes imposed on Acquiror or relating to the Transferred Assets that are not Company Liabilities and any Transfer Taxes allocated to Acquiror pursuant to Section 2.5.

 

Acquiror shall be responsible for, and satisfy and discharge when due, the Post-Closing Acquiror Liabilities and shall be responsible for and indemnify and hold harmless the Company and its Affiliates (other than Acquiror) with respect to, any such Post-Closing Acquiror Liabilities in accordance with the terms hereof.

 

(c)       Certain Indemnities. For clarity, the Parties acknowledge and agree that the provisions of this Section 1.2 do not in any way alter or otherwise diminish an Indemnifying Party’s obligations regarding indemnification under Section 9.2.

 

1.3Non-Transferable Assets.

 

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(a)       Notwithstanding anything to the contrary in this Agreement, if any Transferred Asset is not assignable or transferable without a consent, waiver, authorization or acknowledgment from a third party, and any such consent, waiver, authorization or acknowledgment is not obtained prior to the Closing (each, a “Non-Transferable Asset”), this Agreement and the related instruments of transfer shall not constitute an assignment or transfer of such Non-Transferable Asset, and Acquiror or its designee(s) shall not acquire or assume the Company’s rights or obligations under such Non-Transferable Asset (and such Non-Transferable Asset shall not be included in the Transferred Assets unless and until such consent, waiver, authorization or acknowledgment is obtained); provided, however, that subject to the satisfaction or waiver of the conditions contained in Section 2.1(b), the Closing shall occur notwithstanding the foregoing without any adjustment to the Closing Date Consideration on account thereof; and, provided, further, that following the Closing, the Company shall use commercially reasonable efforts to obtain any such consent, waiver, authorization or acknowledgment as soon as reasonably practicable after the Closing Date and thereafter the Company shall transfer and assign to Acquiror such Non-Transferable Assets; provided, that in no event shall the Company be required to incur any material (in amount or nature) additional obligations in connection with its efforts to obtain such consent; and provided, further, that Acquiror shall cooperate with the Company in obtaining such consent. Following any such assignment or transfer, such Non-Transferable Asset shall be deemed Transferred Assets for purposes of this Agreement.

 

(b)         To the extent that any Transferred Asset and/or Post-Closing Acquiror Liability cannot be transferred to Acquiror following the Closing, Acquiror and the Company shall use commercially reasonable efforts to enter into such arrangements (such as subleasing, sublicensing or subcontracting) to provide to the parties the economic and, to the extent permitted under applicable Law, operational equivalent of the transfer of such Transferred Asset and/or Post-Closing Acquiror Liability to Acquiror as of the Closing and the performance by Acquiror of its obligations with respect thereto. Acquiror shall, as agent or subcontractor for the Company, pay, perform and discharge fully the liabilities and obligations of the Company thereunder from and after the Closing Date.

 

Article II

CLOSING AND CLOSING PAYMENTS

 

2.1The Closing.

 

(a)       Closing. Subject to the terms and conditions of this Agreement, Acquiror and the Company shall consummate the Transactions at a closing (the “Closing”) to take place on a date to be mutually agreed by the Parties, provided that such date shall take place as soon as practicable following satisfaction or waiver (if permissible hereunder) of the conditions set forth in Section 2.1(b) (other than those conditions that by their nature are to be satisfied at the Closing, but subject to satisfaction or waiver (if permissible hereunder) of those conditions at the Closing), by electronic exchange of documents, unless another time or place is mutually agreed upon in writing by Acquiror and the Company. The date upon which the Closing occurs hereunder shall be referred to herein as the “Closing Date.”

 

(b)Conditions to the Closing.

 

(i)         Mutual Conditions. The respective obligations of Acquiror and the Company to consummate the Transactions shall be subject to the satisfaction, at or prior to the Closing, of the following conditions:

 

A.   No Legal Restraints. No Law or Order (whether temporary, preliminary or permanent) shall be in effect which has the effect of making any Transaction illegal or otherwise prohibiting or preventing consummation of any Transaction in accordance with the terms hereof.

 

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(ii)       Additional Acquiror Conditions. The obligations of Acquiror to consummate the Transactions shall be subject to the satisfaction, at or prior to the Closing, of each of the following additional conditions, any of which may be waived in writing exclusively by Acquiror:

 

A. Representations and Warranties.

 

1. The representations and warranties of the Company that are not qualified by materiality shall have been true and correct in all material respects on the date that they were made and shall be true and correct in all material respects on and as of the Closing Date as though such representations and warranties were made on and as of such date (other than the representations and warranties of the Company made only as of a specified date, which shall be true and correct in all material respects as of the specified date).

 

2.   The representations and warranties of the Company that are qualified by materiality shall have been true and correct in all respects on the date that they were made and shall be true and correct in all respects on and as of the Closing Date as though such representations and warranties were made on and as of such date (other than any such representations and warranties of any of the Company made only as of a specified date, which shall be true and correct in all respects as of the specified date).

 

B. Covenants. The Company shall have performed and complied in all material respects with all covenants and obligations under this Agreement and any Related Agreement to which the Company is a party required to be performed and complied with by the Company prior to the Closing.

 

C. Intentionally Omitted.

 

D. Intentionally Omitted.

 

E.   Closing Deliveries. The Company shall have delivered to Acquiror all certificates and other documents that they are required to deliver to Acquiror pursuant to this Agreement prior to the Closing, including the Assignment and Assumption Agreement and Bill of Sale, Patent Assignment Agreement, Trademark Assignment Agreement, the Distribution Agreement, the Investment Agreement and the Livermore Sublease, in each case, duly executed and delivered by the Company or its Affiliates, as applicable.

 

 

 

 

G. Stanford Consent. Acquiror shall have received the necessary consent, waiver and/or approval of Stanford University or its Affiliates (“Stanford”) to the Amended and Restated Exclusive License Agreement between the Board of Trustees of the Leland Stanford Junior University (the “Stanford Agreement”) and the Company.

 

H. Nidek License. Nidek Co., Ltd. (“Nidek”) has granted a non-exclusive license to Acquiror and its Affiliates to use the Nidek Patents in substantially the same manner as provided for in the Nidek- TMLS Sublicense Agreement for the period starting from the Closing Date and ending on the date of expiration of the Nidek Patents.

 

I. Officer’s Certificate. Acquiror shall have received a certificate from the Company, validly executed by an executive officer of the Company for and on the Company’s behalf, to the effect that, as of the Closing the conditions set forth in Sections 2.1(b)(ii)A and 2.1(b)(ii)B have been satisfied.

 

J.   FIRPTA Certificate. The Company shall have delivered to Acquiror a duly executed certificate of non-foreign status from the Company that meets the requirements set forth in Treasury Regulations Section 1.1445-2(b)(2).

 

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K. Manufacturing Services Agreement.   The Manufacturing Services Agreement reflecting the material terms agreed between the Parties as set forth on Exhibit G shall be in full force and effect.

 

L.   Equity Investment. The Investment Agreement executed concurrently with this Agreement shall be in full force and effect, and all conditions precedent under the Investment Agreement for the closing thereunder shall be satisfied or waived pursuant to the terms of the Investment Agreement.

 

M.   Termination of Guaranty Letter. A termination notice in respect of that certain guaranty letter dated April 8, 2015 executed by Guarantor in favor of Coherent Inc. (“Coherent Guaranty”) shall have been submitted by Guarantor to Coherent Inc. in accordance with the terms of the Coherent Guaranty.

 

N.Supply Agreement. The Supply Agreement shall be in full force and effect.

 

(iii)       Additional Company Conditions. The obligations of the Company to consummate the Transactions shall be subject to the satisfaction at or prior to the Closing of the following conditions, any of which may be waived in writing exclusively by the Company:

 

A.Acquiror Representations and Warranties.

 

1.         The representations and warranties of Acquiror that are not qualified by materiality shall have been true and correct on the date they were made and shall be true and correct in all material respects on and as of the Closing Date as though such representations and warranties were made on and as of such date (other than the representations and warranties of Acquiror made only as of a specified date, which shall be true and correct in all material respects as of the specified date), except as would not prevent Acquiror from consummating the Transactions.

 

2.         The representations and warranties of Acquiror that are qualified by materiality shall have been true and correct on the date they were made and shall be true and correct in all respects on and as of the Closing Date as though such representations and warranties were made on and as of such date (other than the representations and warranties of Acquiror made only as of a specified date, which shall be true and correct in all material respects as of the specified date), except as would not prevent Acquiror from consummating the Transactions.

 

B.   Acquiror Covenants. Acquiror shall have performed and complied in all material respects with all covenants and obligations under this Agreement and the Related Agreements to which they are a party required to be performed and complied with by them prior to the Closing.

 

C.     Officer’s Certificate. The Company shall have received a certificate from Acquiror, validly executed by an officer of Acquiror for and on Acquiror’s behalf, to the effect that, as of the Closing, the conditions set forth in Sections 2.1(b)(iii)A and 2.1(b)(iii)B have been satisfied.

 

D.     Receipt of Closing Deliveries. Acquiror shall have executed and delivered to the Company the Assignment and Assumption Agreement and Bill of Sale, Patent Assignment Agreement, Trademark Assignment Agreement, the Distribution Agreement, the Investment Agreement, the Stanford Agreement, and the Livermore Sublease in connection with the Transactions.

 

E.     Manufacturing Services Agreement. The Manufacturing Services Agreement reflecting the material terms agreed by the Parties as set forth on Exhibit G shall be in full force and effect.

 

F.     Equity Investment. The Investment Agreement executed concurrently with this Agreement shall be in full force and effect, and all conditions precedent under the Investment Agreement for the closing thereunder shall be satisfied or waived.

 

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G.Supply Agreement. The Supply Agreement shall be in full force and effect.

 

2.2   Payment of Consideration. On the Closing Date, Acquiror shall deposit, or cause to be deposited, by wire transfer of immediately available funds, with the Company (or its designee), into an account designated by the Company in a written notice delivered to Acquiror at least two (2) Business Days prior to the Closing Date, an amount of cash equal to the Closing Date Consideration. The parties acknowledge that (a) there could be certain delays in the development of the new GenM series of PASCAL product as compared to the schedule previously communicated by the Company to Acquiror during pre-due diligence and (b) the Closing Date Consideration takes into account the risk of such delays.

 

2.3Intentionally Omitted.

 

2.4       Allocation of Consideration. Within one hundred twenty (120) days after the Closing Date, Acquiror shall provide the Company (or its designee) with a draft of the Tax Allocation. The Company shall have sixty (60) days to review and comment or, if the Company disagrees with the Tax Allocation prepared by Acquiror, object on the Tax Allocation.  If the Company and Acquiror are unable to resolve any disagreements with respect to Tax Allocation prepared by Acquiror after good faith discussions within thirty (30) days, then either the Company or Acquiror may elect for such matter to be referred to an internationally recognized independent accounting firm, who shall review the Tax Allocation in accordance with the regulations of the Internal Revenue Service, the costs of which shall be split equally between the Company and Acquiror, and make a determination with respect to the matter within thirty (30) days, which determination shall be binding upon the Parties. The Tax Allocation and all Tax Returns (including IRS Form 8594) shall be prepared in a manner consistent with (and the parties shall not otherwise file a Tax Return position inconsistent with) the Tax Allocation unless required by the Internal Revenue Service or any other applicable Tax authority. The Company and Acquiror shall not take any position inconsistent with the Tax Allocation upon examination of any Tax Return, in any refund claim, in any litigation, or otherwise.

 

2.5       Transfer Taxes. All Transfer Taxes incurred, imposed or levied by reason of, in connection with or attributable to this Agreement or the Transactions shall be borne 50% by the Company, on the one hand, and 50% by the Acquiror, on the other. Acquiror and the Company shall use commercially reasonable efforts to minimize any Transfer Taxes payable in connection with the Asset Purchase. The party required by applicable Law to file any Tax Return with respect to such Transfer Taxes shall file such Tax Return in the time and manner required by Law and shall timely pay all Transfer Taxes reflected on such Tax Return, and the non-filing party shall reimburse the filing party for 50% of any Transfer Taxes paid by the filing party within ten (10) Business Days of receipt of reasonably satisfactory evidence of the amount of such Transfer Taxes.

 

2.6       Withholding Taxes. Notwithstanding anything herein to the contrary, Acquiror and its Affiliates and their respective Representatives shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement, including Sections 2.2 and 2.3, such amounts as may be required to be deducted or withheld therefrom under any provision of federal, state, local or foreign Tax law or under any Laws or Orders. To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

 

Article III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as set forth in the disclosure schedule delivered by the Company to Acquiror on the Agreement Date (the “Disclosure Schedule”), the Company hereby represents and warrants to Acquiror, as of the Agreement Date and the Closing Date, as though made at such Closing Date, as follows:

 

3.1Organization and Good Standing.

 

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(a)       The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California. The Company has the requisite corporate power to own, lease and operate its assets and properties and to carry on its business as currently conducted. The Company is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the ownership of the Transferred Assets or the operation of the Business as currently conducted requires such qualification, except where the failure to be so qualified or in good standing has not been or would not reasonably be expected to have a Material Adverse Effect.

 

(b)       The Company does not have any Subsidiaries. Except as provided in Section 3.1(b) of the Disclosure Schedule, no Affiliate of the Company has any right, title or interest in any Transferred Asset or any Licensed IP or bears any material responsibility for any Company Liability, or otherwise operates the Business.

 

3.2       Authority and Enforceability. The Company has all requisite corporate power and authority to enter into this Agreement and any Related Agreements to which it is a party and to consummate (or cause the consummation of) the Transactions. The execution and delivery by the Company of this Agreement and any Related Agreements to which the Company is a party, and the consummation of the Transactions, have been duly authorized by all necessary corporate and other action on the part of the Company and no further corporate or other action is required on the part of the Company to authorize this Agreement and any Related Agreements to which the Company is a party or to consummate any Transaction. This Agreement has been duly executed and delivered by the Company and this Agreement is, and each of the Related Agreements to which the Company is or will be a party when executed and delivered by the Company, and assuming the due authorization, execution and delivery by the other parties hereto and thereto, will be valid and binding obligations of the Company enforceable against it in accordance with their respective terms, subject to Laws of general application relating to bankruptcy, insolvency, moratorium, the relief of debtors and enforcement of creditors’ rights in general (regardless of whether enforcement is sought in a proceeding at law or in equity).

 

3.3Title to and Condition of Transferred Assets.

 

(a)       The Company is the sole and exclusive owner of, and has good, exclusive and transferable title to, all of the Transferred Assets and has the power to sell the Transferred Assets free and clear of all Liens pursuant to this Agreement. To the Knowledge of the Company, no Transferred Asset (i) is subject to any material Action or outstanding Order that restricts in any manner the use, transfer or licensing thereof or that may affect the validity, use or enforceability of any of the Transferred Assets or any rights or remedies relating thereto or (ii) is owned or held, in whole or in any part, by any Person other than the Company. At the Closing, Acquiror will obtain good and valid title to the Transferred Assets, free and clear of all Liens. The Transferred Assets do not include any shares in the capital of, or any other Equity Interests in, any Person. All tangible assets and properties which are part of the Transferred Assets are in good operating condition and repair, subject to normal wear and tear, are free from material defects, are regularly and properly maintained and are usable in the ordinary course of business of the Business as currently conducted.

 

(b)       The Transferred Assets to be transferred to Acquiror at the Closing, together with all of the Licensed IP and other rights, licenses, services, and benefits to be provided to Acquiror pursuant to the Related Agreements, (i) constitute all of the Assets (tangible and intangible, including Intellectual Property Rights) that are (or during the twelve (12) months prior to the Agreement Date have been) used in, held for use in, necessary for or related to the conduct of the Business, and are sufficient to conduct the Business in substantially the same manner as such Business being conducted during the twelve (12) months prior to the Agreement Date.

 

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(c)       Schedule 3.3(c) of the Disclosure Schedule accurately sets out a list of all Transferred Inventory as of December 31, 2020, including the item number, description, approximate amount remaining and other information as reasonably available to the Company. The Transferred Inventory was manufactured and has at all times been transported and stored in accordance with all applicable requirements of any Governmental Entity and applicable Laws. The Transferred Inventory is substantially similar to the level of inventory as currently maintained by TMLS, subject to reasonable adjustments, acquisitions or dispositions, and any other relevant actions, to account for any changes to inventory in the ordinary course of business and as necessary to account for any force majeure events, including COVID-

19.

 

3.4       Governmental Approvals. No consent, notice, waiver, approval, Order or authorization of, or registration, declaration or filing with any Governmental Entity, is required by, or with respect to, the Company in connection with the execution and delivery of this Agreement and any Related Agreement to which the Company is a party or the consummation of the Transactions, except for such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings which, if not obtained or made, would not materially impair the Company’s ability to consummate the Transactions.

 

3.5       Conflicts. The execution and delivery by the Company of this Agreement and any Related Agreement to which the Company is a party, and the consummation of the Transactions, will not result in the creation or imposition of any Lien upon the Transferred Assets and the Licensed IP and will not conflict with or result in any material breach, violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any right or obligation or loss of any benefit under, or require any notice, consent, waiver, or approval under (any such event, a “Conflict”) (a) any provision of the Charter Documents of the Company, as amended, (b) any Law or Order applicable to the Company with respect to the Transferred Assets, the Licensed IP, or the Business, or (c) any Transferred Contract, any Business Permit, or any other Transferred Asset, or any Lien or Contract to which the Company or any of its Affiliates, to which any of the Transferred Assets or Licensed IP, are bound or subject, except, in the case of clauses (b) and (c) above, where the Conflict would not, individually or in the aggregate, be material.

 

3.6       Company Financial Statements. The Company has Made Available to Acquiror its financial reporting package as submitted to Guarantor for the fiscal year ended March 31, 2020, which contains (i) the unaudited balance sheet of the Company as of March 31, 2017, March 31, 2018 and March 31, 2019 and (ii) unaudited profit and loss statement for the twelve month periods ended March 31, 2017, March 31, 2018 and March

31, 2019 (the financial statements referred to in clauses (i) and (ii), the “Financial Statements”). To the Knowledge of the Company, (A) the Financial Statements are true and correct in all material respects and have been prepared in accordance with GAAP consistently applied throughout the periods indicated in all material respects; (B) the Financial Statements present fairly, in all material respects, the operation of the Transferred Assets of the Company and the Business.

 

3.7Intentionally Omitted.

 

3.8       Absence of Certain Changes. Since March 31, 2020, (a) no Material Adverse Effect has occurred or arisen, and (b) the Company has not taken any action that would be prohibited by Section 6.2 if proposed to be taken or actually taken after the Agreement Date.

 

3.9Tax Matters.

 

(a)       To the extent that failure to do so would adversely impact the Transferred Assets, the Licensed IP, or Acquirer’s ownership of the Transferred Assets or operation of the Business, the Company (a) has timely paid all Taxes it is required to pay and (b) has timely filed all required Tax Returns relating to any and all Taxes concerning or attributable to the Transferred Assets, the Licensed IP and the Business

 

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and such Tax Returns are true and correct in all material respects and completed in accordance with applicable Law.

 

(b)       To the extent that failure to do so would adversely impact the Transferred Assets, the Licensed IP or Acquirer’s ownership of the Transferred Assets or operation of the Business, the Company has timely paid or withheld with respect to Business Employees (and timely paid over any withheld amounts to the appropriate Taxing authority) all federal and state income taxes, Federal Insurance Contribution Act, Federal Unemployment Tax Act and other payroll Taxes required to be withheld or paid.

 

(c)There are no Liens with respect to any Taxes upon any of the Transferred Assets or

Licensed IP, other than with respect to Taxes not yet due and payable.

 

(d)       To the extent applicable to the Transferred Assets, the Licensed IP or the Acquirer’s ownership of the Transferred Assets or operation of the Business, there is no Tax deficiency outstanding, assessed or proposed against the Company, nor has the Company executed any outstanding waiver of any statute of limitations on or extension of the period for the assessment or collection of any Tax.

 

(e)       To the extent applicable to the Transferred Assets, the Licensed IP or the Acquirer’s ownership of the Transferred Assets or operation of the Business, (i) no audit or other examination of any Tax Return of the Company is presently in progress to the Knowledge of the Company, nor has the Company been notified of any request for such an audit or other examination; (ii) no adjustment relating to any Tax Return filed by the Company has been proposed formally or, to the Knowledge of the Company, informally by any Tax authority to the Company or any representative thereof; and (iii) to the Knowledge of the Company, no claim has ever been made by an authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.

 

(f)None of the Transferred Assets are “United States real property interests” as defined in

Section 897(c) of the Code.

 

3.10Real Property.

 

(a)       Section 3.10 of the Disclosure Schedule sets forth a true and complete list of all Real Property currently leased, subleased or licensed by the Company that is used in the Business (such property, the “Leased Real Property”), including for each such Leased Real Property, the address thereof (the “Lease Agreements”). None of the Company or any of its Affiliates own any Real Property that is used in the Business.

 

(b)       All Lease Agreements are valid and effective in accordance with their respective terms against the Company, and, to the Knowledge of the Company, the other parties thereto, and there is not, under any of such leases, any existing default, (or event which with notice or lapse of time, or both, would constitute a default) by the Company, and, to the Knowledge of the Company, the other parties thereto. The Leased Real Property is in good operating condition, subject to normal wear and tear, and otherwise suitable for the conduct of the Business in all material respects. Neither the operations of the Company on the Leased Real Property nor such Leased Real Property, including the improvements thereon, violate in any material respect any applicable lease, building code, zoning requirement or statute relating to such property or operations thereon.

 

3.11Intellectual Property.

 

(a)       Registered IP. Section 3.11(a) of the Disclosure Schedule sets forth a current, complete, and correct list of all Registered Transferred IP, in each case listing, as applicable, (i) the name of the

 

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applicant or registrant and current owner, (ii) country where the application or registration is located, (iii) the title and application or registration number, and (iv) the filing date, and issuance, registration, or grant date; (v) the status of such item. With respect to each item of Registered Transferred IP all necessary registration, maintenance and renewal fees and taxes due have been paid, and all necessary documents and certificates have been filed with the U.S. Patent and Trademark Office, Copyright Office or other relevant Governmental Entity, as the case may be, for the purposes of registering, maintaining and renewing, as applicable, such Registered Transferred IP. As of the Agreement Date, except as set forth in Section 3.11(a) of the Disclosure Schedule, to the Knowledge of the Company, there is no pending, and there has not been, any material Action as to which the Company received written notice, challenging the use, ownership, validity, enforceability or registrability of any Registered Transferred IP, excluding office actions received in the ordinary course of prosecution. All of the Transferred IP and Licensed IP is subsisting, and, to the Knowledge of the Company, not invalid or unenforceable (other than pending applications thereof), and to the Knowledge of the Company, there are no facts, circumstances, or information that would render any of the Transferred IP or Licensed IP invalid or unenforceable.

 

(b)Intentionally left blank.

 

(c)       Employees and Contractors. Each current and former employee, officer, director, and independent contractor of the Company who is or has been involved in the creation, development, writing, invention, conception or discovery of the Transferred IP or Licensed IP has assigned exclusively to the Company all Intellectual Property Rights created, developed, written, invented, created, conceived, or discovered by such employee, officer, director, or independent contractor, as applicable, in the scope of such employment or service and such Person has agreed not to use or disclose any confidential or proprietary information of the Company except as authorized by the Company. To the Knowledge of the Company, there has been no unauthorized disclosure by any employees, officers, directors, consultants, or contractors of the Company of any Trade Secrets included in the Transferred IP or Licensed IP that would compromise the confidentiality of such Trade Secrets or their status or protectability as Trade Secrets under applicable Law.

 

(d)       No Remuneration. To the Knowledge of the Company, the Company does not owe any compensation or remuneration that are payable to a current or former employee, officer, director, or independent contractor in relation to any Transferred IP or Licensed IP (other than amounts owed as part of salaries for any such employees, officers, or directors in the ordinary course of business) in any material respect, including amounts owed to employees under applicable Laws regarding employee invention assignment, and including with respect to any Patent in the Transferred IP or Licensed IP that is based on an invention of, or Copyright in the Transferred IP that is based on any Technology of any current or former employee, officer, director or independent contractor of the Company.

 

(e)       Title. The Company solely and exclusively owns the Transferred IP free and clear of all Liens, and has a valid right to assign to Acquiror all right, title and interest in and to the Transferred IP. The Company or one of its Affiliates either owns or has a valid right in or to the Licensed IP to grant to Acquiror and its Affiliates the rights and licenses set forth in Article V. Following the Closing, all Transferred IP shall be fully transferable and alienable by the Acquiror, and none of the Company, any prior owner, or any inventor of such Transferred IP will retain any right or interest in or to the Transferred IP. To the Knowledge of the Company, there are no facts, circumstances or information that would or reasonably could be expected to adversely affect, limit, restrict, impair, or impede the ability of the Acquiror to use, practice and otherwise exploit the Transferred IP or Licensed IP upon the Closing in the same manner as currently used, practiced and otherwise exploited by the Company in the Business. The Company has not received any written notice or claim challenging the Company’s sole and exclusive ownership of any Transferred IP or Licensed IP.

 

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(f)         No Infringement by Business. To the Knowledge of the Company, the Business, including the research, design, development, use, assembly, testing, marketing, promotion, branding, qualification, certification, configuration, installation, integration, implementation, sourcing, procurement, operation, licensing, distribution, sale, fulfillment, maintenance, support (including warranty service) and commercialization of the Business Products: (i) does not and has not infringed, misappropriated, or otherwise violated any Intellectual Property Rights or other rights of any third party: and (ii) does not and has not constitute unfair competition or trade practices under the applicable Laws of any relevant jurisdiction. As of the date of this Agreement, there is no Action pending or, to the Knowledge of the Company, threatened against the Company (i) alleging that the Business is infringing, misappropriating, or violating the Intellectual Property Rights or other rights of any Person, or constitutes unfair competition or trade practices, or (ii) challenging the Company’s ownership of any Transferred IP or Licensed IP.

 

(g)       No Infringement of Business IP. To the Knowledge of the Company, no Person has infringed, misappropriated, or otherwise violated, or is currently infringing, misappropriating, or otherwise violating any Transferred IP or Licensed IP.   The Company has not sent any notices alleging any of the foregoing, or offers to license any Transferred IP or Licensed IP.

 

(h)Intentionally Omitted.

 

(i)         Open Source Software. Section 3.11(i) of the Disclosure Schedule contains a complete and correct list of all material Open Source Software items that are incorporated into, integrated or bundled with, linked with or otherwise used in any Business Product. The Company has operated the Business in compliance with the terms and conditions of all applicable Open Source Licenses to which any Software included in the Business Product is subject in all material respects.

 

(j)         Bugs and Defects. To the Knowledge of the Company, the Business Products perform substantially in accordance with the functional specifications and documentation provided to customers of the Company. The Company has not received notice of and does not have Knowledge of any material bugs, errors, non-conformities, or other problems or issues with respect to the Business Products, except as reported and resolved in the ordinary course of business without material liability to the Company. The Company has taken reasonable steps and implemented reasonable procedures (based on standard industry practices) to ensure that the Business Products are free from viruses and other disabling codes.

(k)Intentionally left blank. (l)Intentionally left blank.

 

(m)Intentionally left blank.

 

(n)       No Government Funding.     No government funding, facilities or resources of a Governmental Entity, university, college, or other educational institution or research center was used in the development of any Business Product and no Governmental Entity, university, college, or other educational institution or research center has any claim or right in or to any Business Product or Transferred IP.

 

(o)       Inbound License Agreements. Section 3.11(o) of the Disclosure Schedule sets forth a complete and correct list of all Inbound License Agreements that have been entered into in connection with the Business, excluding the Nidek-Topcon Patent License Agreement and for listing purposes only those licenses to the Company granted by employees or consultants of the Company pursuant to employee or consultant Standard Form IP Contracts in the forms which have been disclosed to Acquiror prior to Closing.

 

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(p)       Outbound License Agreements. Section 3.11(p) of the Disclosure Schedule sets forth a complete and correct list of all Outbound License Agreements, excluding for listing purposes only those: (i) express non-exclusive licenses under a Standard Form IP Contract for Business Products granted to Customers of the Company in the ordinary course of business; and (ii) stand-alone non-disclosure agreements that do no more than grant to third parties limited scope and use rights with respect to the Trade Secrets in the Transferred IP for the limited purposes set forth therein and which do not allocate rights materially differently than in the Company’s Standard Form IP Contracts.

 

(q)       Business License Agreements. All Inbound License Agreements and all Outbound License Agreements (together, the “Business License Agreements”) that are Transferred Contracts are in full force and effect, and enforceable in accordance with their terms. There is no outstanding dispute or disagreement with respect to any Business License Agreement. The Company and, to the Knowledge of the Company, any other party to any Business License Agreement, is not in breach or default of any Business License Agreement. No third party who has licensed any Transferred IP from, or material Intellectual Property Rights used in the Business to, the Company, as applicable, has ownership rights or license rights to modifications or improvements made by the Company in the technology embodying such Intellectual Property Rights.

 

(r)Intentionally omitted.

 

(s)       Effects of the Transaction. Neither the execution, delivery and performance of this Agreement, the Related Agreements and such other agreements, documents and instruments to be executed and delivered after the Agreement Date, nor the consummation of the transactions contemplated hereby or thereby will violate or result in the breach, modification, cancellation, termination or suspension of, acceleration of any payments under, or expansion or transfer of any Intellectual Property Rights under, any Business License Agreement, except as would not reasonably be expected to have a Material Adverse Effect. Except as a result of any Contracts, duties or obligations that Acquiror is subject to prior to the consummation of the transactions contemplated by the Transaction Agreements, neither the execution, delivery and performance of this Agreement, the Related Agreements and such other agreements, documents and instruments to be executed and delivered after the Agreement Date nor the consummation of the transactions contemplated hereby and thereby, nor any Contract to which the Company is a party or otherwise bound, will cause or require (or purports to cause or require) Acquiror to: (i) grant to any other Person any license, covenant not to sue, authority, immunity or other right with respect to or under any Technology or Intellectual Property Rights owned by Acquiror independent of the transactions contemplated by this Agreement; or (ii) be obligated to pay any royalties or other amounts, or offer any discounts, to any other Person.

 

(t)Licensed Patents; Sufficiency.   Subject to the grant of license by Nidek under Section

2.1(b)(ii)H, the rights to Technology that the Company have under the Inbound License Agreements and the Technology licensed pursuant to Article V of this Agreement constitute all of the Technology used in

or necessary for the conduct and operation of the Business (in the manner as the Business is currently

conducted and currently contemplated to be conducted), the use of the Transferred Assets, and for Acquiror to market, license, support and maintain the Business Products after Closing in substantially the same

manner as marketed, licensed, supported, or maintained prior to the Closing.

 

(u)       Privacy and Security. To the Knowledge of the Company, neither the execution, delivery and performance of this Agreement, nor the license of the Licensed IP, nor the transfer of all of the Transferred Assets, including all data and other information, including Private Data, relating to Customers and all non-Customer users of the Business Sites and of other Business Products, from the Company to Acquiror will cause, constitute, or result in a breach or violation of any Privacy Law or any Business Privacy Policy. Copies of all Business Privacy Policies have been Made Available.

 

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(v)       Stanford Agreement. The Company does not owe any royalty payments to Stanford and does not have any obligation to pay any running royalties or other similar amounts under the Stanford Agreement based upon the grant or any exercise of rights under the Nidek-TMLS Sublicense Agreement for the sale of Licensed Products (as defined in the Nidek-TMLS Sublicense Agreement) by Nidek.

 

3.12Material Contracts.

 

(a)Section 3.12(a) of the Disclosure Schedule lists each of the following Contracts, to which the Company is a party and is in effect as of the Agreement Date (such contracts, the “Material Contracts”):

 

(i)       any Contract that is with a Customer who paid aggregate consideration to the Company for goods or services rendered in an amount greater than $200,000 for the most recent fiscal year or a Top Supplier;

 

(ii)       any Contract that relates to the Business, the Business Products, the Transferred Assets, the Licensed IP, or the Business Employees that payments by or to the Company of more than $100,000 per year in the aggregate, other than agreements with Business Employees, in each case cannot be cancelled without penalty or without more than ninety (90) days’ notice;

 

(iii)       any Contract pursuant to which the Company is bound to or has committed to provide any Business Product or Transferred IP to any third party on a most favored nation basis or similar terms;

 

(iv)       any Contract pursuant to which the Company is bound to, or has committed to provide or license, any Business Product or Transferred IP to any third party on an exclusive basis or to acquire or license any product or service on an exclusive basis from a third party;

 

(v)       any Contract related to the Business, the Business Products, the Transferred Assets, the Licensed IP or the Business Employees imposing any restriction on the right or ability of the Company or its Affiliates: (A) to engage in any business practices or other activities, (B) to compete with any other Person or to engage in any line of business, market or geographic area, or to sell, license, manufacture or otherwise distribute any of the Business Products, or from providing services, to Customers or potential Customers, in any geographic area, during any period of time, or in any segment of the market; (C) to solicit the employment of, or hire, any potential employees, consultants or independent contractors, other than agreements with Business Employees; (D) to acquire any product, property or other asset (tangible or intangible), or any services, from any other Person, to sell any product or other asset to or perform any services for any other Person or to transact business or deal in any other manner with any other Person; or (E) to develop or distribute any software or technology;

 

(vi)       any Contract related to the Business that is a collectively bargained agreement or similar Contract, including any Contract with any union, works council or similar labor entity;

 

(vii)any Contract that is a Lease Agreement;

 

(viii)     all Contracts that relate to the Business, the Business Products, the Transferred Assets, the Licensed IP or the Business Employees relating to the settlement or other resolution of any Action;

 

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(ix)       all Contracts that relate to the Business, the Business Products, the Transferred Assets, the Licensed IP or the Business Employees involving or incorporating any guaranty, pledge, performance or completion bond, indemnity or surety arrangement;

 

(x)       all Contracts that relate to the Business, the Business Products, the Transferred Assets, the Licensed IP or the Business Employees creating or relating to any partnership or joint venture or any sharing of revenues, profits, losses, costs or liabilities;

 

(xi)       all Contracts that relate to the Business, the Business Products, the Transferred Assets, the Licensed IP or the Business Employees involving purchase or sale of any product or other asset by or to, or the performance of any services by or for, any Interested Party;

 

(xii)     all Contracts that relate to the Business, the Business Products, the Transferred Assets or the Licensed IP constituting or relating to any (A) prime contract, subcontract, letter contract, purchase order or delivery order executed or submitted to or on behalf of any Governmental Entity or any prime contractor or higher-tier subcontractor, or under which any Governmental Entity or any such prime contractor or subcontractor otherwise has or may acquire any right or interest, or (B) quotation, bid or proposal submitted to any Governmental Entity or any proposed prime contractor or higher-tier subcontractor of any Governmental Entity; and

 

(xiii)   any other Contract that relates to the Business, the Business Products, the Transferred Assets, the Licensed IP or the Business Employees under which the consequences of a default or termination would reasonably be expected to cause a Material Adverse Effect to the Business, Transferred Assets, Licensed IP or the Post-Closing Acquiror Liabilities.

 

(b)       The Company has Made Available true, correct and complete copies of all Material Contracts, including all amendments in effect as of the Agreement Date thereto. Each Material Contract is valid and in full force and effect and is enforceable by the Company that is a party thereto in accordance with its terms, subject to Laws of general application relating to bankruptcy, insolvency and the relief of debtors; and rules of law governing specific performance, injunctive relief and other equitable remedies The Company has not violated or breached in any material respect, or committed any material default under, any Material Contract and, to the Knowledge of the Company, no other Person that is party to a Material Contract has violated or breached in any material respect, or committed any material default under, such Material Contract. To the Knowledge of the Company, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will or could reasonably be expected to: (i) result in a material violation or breach of any of the provisions of any Material Contract; (ii) give any Person the right to declare a default or exercise any remedy under any Material Contract; (iii) give any Person the right to accelerate the maturity or performance of any Material Contract; or (iv) give any Person the right to cancel, terminate or modify any Material Contract. As of the Agreement Date, the Company has not received any written notice regarding any actual or alleged violation or breach of, or default under, any Material Contract. The Company has not waived any of its rights under any Material Contract. No Person has threatened the Company to terminate or refuse to perform its obligations under any Material Contract in any material respects. No Person has submitted written notices to renegotiate any amount paid or payable to the Company under any Material Contract or any other material term or provision of any Material Contract.

 

3.13Employee Benefit Plans.

 

(a)Schedule.   Section 3.13(a) of the Disclosure Schedule contains a list of each material

Employee Plan.

 

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(b)       Documents. The Company has delivered to Acquiror copies of (i) each Employee Plan that has been reduced to writing and all amendments thereto, (ii) a summary of the material terms of each Employee Plan that has not been reduced to writing, including all amendments thereto, (iii) the summary plan description for each Employee Plan subject to Title I of ERISA, and in the case of each other Employee Plan, any similar employee summary (including but not limited to any employee handbook description), and (iv) all insurance contracts, administrative services contracts, trust agreements, investment management agreements or similar agreements maintained in connection with any Employee Plan.

 

(c)       Employee Plan Compliance. To the Knowledge of the Company, each Employee Plan has been administered in all material respects in accordance with the terms of such plan and the provisions of any applicable Laws, including without limitation ERISA and the Code. All contributions, premiums and other amounts due to or in connection with each Employee Plan under the terms of the Employee Plan or applicable Laws have been timely made, except as would not have a Material Adverse Effect.

 

(d)       Certain Employee Plans.   No Employee Plan: (i) is subject to the minimum funding standards of Section 302 of ERISA or Section 412 of the Code; or (ii) is a “multi-employer plan” (as defined in Section 3(37) of ERISA). Except as would not have a Material Adverse Effect, the Company has not: (A) withdrawn from any pension plan under circumstances resulting (or expected to result) in liability; or (B) engaged in any transaction which would give rise to a liability under Section 4069 or Section 4212(c) of ERISA.

 

(e)       No Post-Employment Obligations. Other than as required under Section 4980B of the Code or other applicable Law, no Employee Plan provides post-termination or retiree or post-employment life insurance, health or death benefits to any person (other than death benefits when termination occurs upon death).

 

(f)       Effect of Transaction. Neither the execution and delivery of this Agreement, nor the consummation of the Transactions (alone or in connection with additional or subsequent events) or any termination of employment or service in connection therewith, will (i) result in any payment (including severance, golden parachute, bonus or otherwise) becoming due to any Business Employee, (ii) result in any forgiveness of indebtedness, (iii) increase any benefits otherwise payable by the Company or (iv) result in the acceleration of the time of payment or vesting of any such benefits except as required under Section 411(d)(3) of the Code, in each case except as would not have a Material Adverse Effect.

 

(g)       The representations and warranties set forth in this Section 3.13 are the Company’s sole and exclusive representations and warranties regarding employee benefit matters.

 

3.14Employment Matters.

 

(a)       The Company has made available to Acquiror a list of all current employees, independent contractors or consultants of the Business.

 

(b)       Compliance with Employment Laws. Solely with respect to the Business Employees, the Company is in compliance, in all material respects, with all applicable Laws respecting employment and employment practices to the extent they relate to the Business Employees, except to the extent non- compliance would not result in a Material Adverse Effect.

 

(c)       Labor. The Company does not have Knowledge of any activities or proceedings of any labor union to organize any Business Employees.

 

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(d)The representations and warranties set forth in this Section 3.14 are the Company’s sole and exclusive representations and warranties regarding employment matters.

 

3.15     Permits. The Company has been issued or granted all Permits that are used in, held for use in, necessary for or related to the conduct or operation of the Business or the Transferred Assets, except for any such Permit where the failure to have been issued or granted such Permit would not be material to the Business, the Transferred Assets or the Post-Closing Acquiror Liabilities (the “Business Permits”); provided that “Business Permits” shall not include any Licensed IP Permits. Such Business Permits are in full force and effect and no such Business Permit is subject to any term, provision, condition or limitation which may adversely change or terminate such Business Permit by virtue of the completion of any of the Transactions. The Company has been and is in compliance with the terms and conditions of such Business Permit in all material respects. The Company has not received any written notice of any breach, violation or default under, or with respect to, any such Business Permit.

 

3.16     Litigation. Except for the Ellex Claims, there is no, and, for the last three (3) years, there has not been, any (a) material Action of pending or, to the Knowledge of the Company, threatened against the Company, its properties and assets (tangible or intangible), or any of its officers or directors (in their capacities as such) relating to the Business, the Transferred Assets, the Licensed IP or any Post-Closing Acquiror Liabilities, or (b) governmental inquiry or investigation pending or threatened against the Company, its properties and assets (tangible or intangible), or any of its officers or directors (in their capacities as such) (including any inquiry as to the qualification of the Company to hold or receive any license or permit) relating to the Business, the Transferred Assets, the Licensed IP or any Post-Closing Acquiror Liabilities. No Governmental Entity has at any time challenged the legal right of the Company to conduct the Business as presently conducted.

 

3.17     Insurance. Section 3.17 of the Disclosure Schedule lists all material insurance policies and fidelity bonds maintained by or on behalf of the Company that relate to the Business in effect as of the Agreement Date.

 

3.18Compliance with Laws.

 

(a)       General. The Company has for the past three (3) years complied with, and is currently in compliance, in all material respects, with, any Law to which the Business, any of the Transferred Assets or Licensed IP are subject. The Company has not received, for the past three (3) years, any notices, written or otherwise, of any actual or potential noncompliance with any Law relating to the Business, Transferred Assets or Licensed IP, nor is, to the Knowledge of the Company, the Company currently threatened with, or under any investigation with respect to, any charge concerning noncompliance with any Law relating to the Business, the Transferred Assets or the Licensed IP.

 

(b)Intentionally Omitted. (c)Intentionally Omitted.

(d)       Environmental Laws. The Company is and has been for the past three years in compliance in all material respects with, and is not in violation in any material respect of, any Environmental Law applicable to the Business, the Transferred Assets and the Licensed IP, which compliance has included obtaining and maintaining all Business Permits required pursuant to such Environmental Laws. The Company has not received any written notices of suspected, potential or actual violation or liability with respect to any Environmental Law applicable to the Business, the Transferred Assets or the Licensed IP. Except as would not be material to the Business, Transferred Assets, Licensed IP or Post-Closing Acquiror Liabilities, no Hazardous Materials are present in, on or under any Leased Real Property, including the land and the improvements, ground water and surface water thereof, that the Company has at any time owned, operated, occupied or leased. With respect to the Business, (i) the Company has not transported or arranged for the transportation of, stored or arranged for the storage of, used, manufactured, disposed of or arranged

 

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for the disposal of, released or exposed their Business Employees or any other person to any Hazardous Materials, (ii) nor has the Company disposed of or arranged for the disposal of, transported or arranged for the transportation of, stored or arranged for the storage of, sold or manufactured any product containing a Hazardous Material in each case of (i) and (ii) above, in a manner that could result in material liability to the Company. To the extent applicable to the operation of the Business, Company has not assumed or provided an indemnity with respect to the liability of any other Person arising under Environmental Law or relating to Hazardous Materials. The Company has Made Available to Acquiror, if any, all material environmental site assessments, audits, and other similar material documents in its possession or control relating to the Business, the Transferred Assets or the Licensed IP and compliance with Environmental Laws or the environmental condition of any real property currently or formerly owned, leased or operated by the Company.

 

3.19     Company Customers and Suppliers.

 

(a)       The Company does not engage in sales activities other than selling or distributing the Business Products to Topcon and its Affiliates and any services related thereto (including selling or distributing spare parts and providing manufacturer repair services for the Business Product), which in turn distributes such products to end-users and other customers through Topcon and its Affiliates’ distribution channels. The Company has not received notice, written or otherwise, nor does the Company have any Knowledge or reason to believe that Topcon (x) has, or intends to, substantially reduce or will substantially reduce, the purchase, order and other use of the Business Products, (y) intends to cancel, terminate, or otherwise materially and adversely modify its relationship or Contract with the Company as it relates to the Business (whether related to payment, price or otherwise) for any reason, or (z) is threatened with bankruptcy or insolvency or is, or is reasonably likely to become, otherwise unable to purchase or pay for the Company’s Business Products from the Company in quantities and manner consistent with past practice.

 

(b)       Section 3.19(b) of the Disclosure Schedule contains a true and correct list of the top ten (10) suppliers or vendors of the Business, whether of products, services, Intellectual Property Rights or Technology or otherwise, by dollar volume of sales and purchases, respectively, for the twelve months ended December 31, 2020 (each such Person, a “Top Supplier”). The Company has not received notice, written or otherwise, nor does the Company have Knowledge that any Top Supplier (y) intends to cancel, terminate or otherwise materially and adversely modify its relationship with the Company as it relates to the Business (whether related to payment, price or otherwise) for any reason, or (z) is threatened with bankruptcy or insolvency or is, or is reasonably likely to become, otherwise unable to supply or support products or services to or for the Company in quantities and manner consistent with past practice.

 

3.20     Interested Party Transactions. No officer, director or any other stockholder of the Company (each, an “Interested Party”), has or has had, directly or indirectly, (i) any interest in any Person which furnished or sold, or furnishes or sells, services, products, Technology or Intellectual Property Rights that relate to the Business to the Company, or (ii) any interest in any Person that purchases from or sells or furnishes to the Company, any goods or services that constitute the Business, or (iii) any interest in, or is a party to, any Business Contract, other than ordinary course employment agreements and Employee Plans that have been Made Available; provided, however, that ownership of no more than five percent (5%) of the outstanding voting shares of a publicly traded corporation shall not be deemed to be an “interest in any Person” for purposes of this Section 3.20. To the Knowledge of the Company, all transactions pursuant to which any Interested Party has purchased any services, products, technology or Intellectual Property Rights that relate to the Business from, or sold or furnished any Technology or Intellectual Property Rights that relate to the Business to, the Company have been on an arms-length basis.

 

3.21     Books and Records. The Company has made and kept Books and Records that are true, correct and complete in all material respects and accurately reflect, in all material respects, the material activities of the

 

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Business.   At the Closing, the Books and Records of the Company that relate to the Business will be in the possession of the Company.

 

3.22     No Broker. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company.

 

3.23     Product Warranties. To the Knowledge of the Company, all Business Products have been and are free from any defects in design, materials or workmanship.

 

 

3.24     Regulatory Matters.

(a)The Company has not had any product or manufacturing site subject to a Government

Entity (including FDA) shutdown or import or export prohibition, nor received any FDA Form 483 or other

Government Entity notice of inspectional observations, “warning letters,” “untitled letters”, enforcement action of any kind or, to the Knowledge of the Company, requests or requirements to make changes to the Business Products or labeling that would reasonably be expected to result in a material liability to the Company or any voluntary or involuntary recall of any Business Products, or similar written correspondence or written notice from the FDA or other Government Entity in respect of the Business and alleging or asserting noncompliance with any applicable Law, Permits or such requests or requirements of a Government Entity, and, to the Knowledge of the Company, neither the FDA nor any Government Entity is considering such action.

 

(b)       All preclinical and clinical trials being conducted by or on behalf of the Company of the Business Products are being or have been conducted in compliance in all material respects with the required experimental protocols, procedures and controls pursuant to applicable Law. The regulatory data, clinical data and other technical information, including any design history files and any data bases incorporating any such data and information, related to the Business Products (“Regulatory Data”), and required to be maintained pursuant to applicable Law, is full and complete in all material respects and, to the Knowledge of the Company, nothing in such Regulatory Data is false or misleading in any material respect. All regulatory filings, including, but not limited to, all information about any product adverse effect medical device reports, in the possession or control of the Company have been made available to the Acquiror.

 

(c)       The manufacture of the Business Products by or on behalf of the Company is being conducted in compliance in all material respects with all applicable Laws including the FDA’s Quality Systems Regulation at 21 CFR Part 820 for products sold in the United States, and the respective counterparts thereof promulgated by Government Entities in countries outside the United States.

 

(d)       The Company, and its officers and directors and, to the Knowledge of the Company, each of its distributors, agents and consultants, are, and at all times have been, in material compliance with federal or state criminal or civil Laws, including the federal Anti-Kickback Statute (42 U.S.C. § 1320a-

7(b)), Stark Law (42 U.S.C. § 1395nn), Federal False Claims (31 U.S.C. § 3729 et. seq.), the Physician Payments Sunshine Act (otherwise known as “Open Payments Act”), Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq., and any comparable state or local laws) and the regulations promulgated pursuant to such Laws, or which are cause for civil or criminal penalties or mandatory or permissive exclusion from Medicare (Title XVIII of the Social Security Act), Medicaid (Title XIX of the Social Security Act) or any other state or federal health care program (each, a “Program”). The Company is not the subject of any pending or, to the Knowledge of the Company, threatened investigation in respect of the Company or the Business Products, by the FDA pursuant to its “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities” Final Policy set forth in 56 Fed. Reg. 46191 (September

10, 1991) and any amendments thereto. There is no proceeding or, to the Knowledge of the Company,

 

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threatened proceeding, against the Company, that could reasonably be expected to result in its exclusion from participation in any Program or other third party payment programs in which the Company participates. In addition, and without limiting the foregoing, the Company is, and at all times has been, in compliance in all material respects with any applicable federal, state, local, foreign, criminal or civil Laws that (i) require companies to adopt or maintain a compliance program or marketing code of conduct that relates to payments made to healthcare professionals, (ii) limit the payments that may be provided to healthcare professionals, or (iii) require certain payments provided to healthcare professionals to be reported or disclosed.

 

3.25     No Other Representations and Warranties. Except for the representations and warranties contained in this Article III (including the related portions of the Disclosure Schedules), neither the Company nor any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of the Company, including any representation or warranty as to the accuracy or completeness of any information regarding the Business and the Transferred Assets furnished or made available to Acquiror and its representatives (including any management presentations or in any other form in expectation of the transactions contemplated hereby) or as to the future revenue, profitability or success of the Business, or any representation or warranty arising from statute or otherwise in law.

 

Article IV

REPRESENTATIONS AND WARRANTIES OF ACQUIROR

 

Acquiror hereby represents and warrants to the Company, as of the Agreement Date and the Closing Date, as though made at such Closing Date, as follows as follows:

 

4.1       Organization and Standing. Acquiror is a corporation duly organized, validly existing and in good standing under the laws of Delaware. Acquiror has the requisite corporate power to own, lease and operate its assets and properties and to carry on its business as currently conducted. Acquiror is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the ownership of its assets or properties (whether owned, leased or licensed) or the operation or nature of its business as currently conducted requires such qualification, except where the failure to be so qualified or in good standing has not been or would not reasonably be expected to (a) prevent, hinder or materially delay any of the Transactions or (b) materially impair the ability of Acquiror to perform its obligations under this Agreement and the Related Agreements.

 

4.2       Authority and Enforceability. Acquiror has all requisite corporate power and authority to enter into this Agreement and any Related Agreements to which it is a party and to consummate (or cause the consummation of) the Transactions. The execution and delivery by Acquiror of this Agreement and any Related Agreements to which Acquiror is a party, and the consummation of the Transactions, have been duly authorized by all necessary corporate and other action on the part of Acquiror and no further corporate or other action is required on the part of the Acquiror to authorize this Agreement and any Related Agreements to which Acquiror is a party or to consummate any Transaction. This Agreement has been duly executed and delivered by Acquiror and this Agreement is, and each of the Related Agreements to which Acquiror is or will be a party when executed and delivered by Acquiror, and assuming the due authorization, execution and delivery by the other parties hereto and thereto, will be valid and binding obligations of Acquiror, enforceable against Acquiror in accordance with their respective terms, subject to Laws of general application relating to bankruptcy, insolvency, moratorium, the relief of debtors and enforcement of creditors’ rights in general (regardless of whether enforcement is sought in a proceeding at law or in equity).

 

4.3       Conflicts. The execution and delivery by Acquiror of this Agreement and any Related Agreement to which Acquiror is a party, and the consummation of the Transactions, will not conflict with or result in any material breach, violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any right or obligation or loss of any benefit under, or

 

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require any notice, consent, waiver, or approval (a) any provision of the Charter Documents of Acquiror, as amended, or (b) any Law or Order applicable to Acquiror, except for conflicts that would not reasonably be expected to be material the Acquiror’s ability to consummate the Transactions. There is no Contract, judgment, injunction, order or decree to which Acquiror is a party which has or may have the effect of prohibiting the Transactions.

 

4.4       No Broker. Other than Stifel Financial Corp. and its Affiliates, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Acquiror.

 

4.5       Litigation. There is no, and, for the last three (3) years, there has not been, any (a) material Action of pending or, to the Knowledge of the Acquiror, threatened against the Acquiror, its properties and assets (tangible or intangible), or any of its officers or directors (in their capacities as such) relating to the Transactions, or (b) governmental inquiry or investigation pending or threatened against the Acquiror, its properties and assets (tangible or intangible), or any of its officers or directors (in their capacities as such) (including any inquiry as to the qualification of the Acquiror to hold or receive any license or permit) relating to the Transactions.

 

4.6       Governmental Approvals. No consent, waiver, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Acquiror in connection with the execution and delivery of this Agreement and any Related Agreements to which Acquiror is a party or the consummation of the Transactions, except for such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings which, if not obtained or made, would not materially impair Acquiror’s ability to consummate the Transactions.

 

4.7       Sufficiency of Funds. Acquiror has and will have sufficient cash on hand or other sources of immediately available funds to pay the Closing Date Consideration as and when due under this Agreement and to consummate the Transactions.

 

4.8       Solvency. Immediately after giving effect to the Asset Purchase, Acquiror shall be solvent and shall: (a) be able to pay its debts as they become due; (b) own property that has a fair saleable value greater than the amounts required to pay its debts (including a reasonable estimate of the amount of all contingent liabilities); and (c) have adequate capital to carry on its business. No transfer of property is being made and no obligation is being incurred in connection with the Transaction with the intent to hinder, delay or defraud either present or future creditors of Acquiror or the Company. In connection with the Transactions, Acquiror has not incurred, nor plans to incur, debts beyond its ability to pay as they become absolute and matured.

 

4.9       Non-Reliance. Acquiror has conducted its own independent investigation, review and analysis of the Business and the Transferred Assets, and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of Acquiror for such purpose. Acquiror acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the Transactions, Acquiror, on behalf of itself and its Affiliates, has relied solely upon its own investigation and the express representations and warranties of the Company set forth in Article III of this Agreement (including related portions of the Disclosure Schedules); and (b) neither the Company nor any other Person has made any representation or warranty as to the Company, the Transferred Assets or this Agreement, except as expressly set forth in Article III of this Agreement (including the related portions of the Disclosure Schedule).

 

Article V LICENSE

 

5.1Licenses to Acquiror. Effective as of the Closing, and subject to the terms and conditions of this

Agreement, for the respective terms set forth in Section 5.4, the Company, on behalf of itself and its applicable

 

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Affiliates, hereby grants to Acquiror and its Affiliates a non-exclusive, worldwide, non-sublicensable, fully paid- up, royalty-free and non-transferable (except in connection with the sale of all or substantially all of the Transferred Assets) license under the Licensed Patents to develop, have developed, make, have made, import, use, offer to sell, sell, have sold and otherwise exploit (or otherwise dispose of) any Licensed Products in Japan (the “License”); provided, however, that the right and license granted in this Section 5.1 is expressly limited to Licensed Products that (i) were or are designed by Acquiror or any of its Affiliates (or, prior to the Closing, the Company or any of its Affiliates) and (ii) are sold, offered for sale, or distributed under a trademark owned or controlled by Acquiror or any of its Affiliates. Except for the rights and licenses granted by the Company under this Section 5.1, this Agreement does not grant to Acquiror or any of its Affiliates or any other Person any right, title, or interest by implication, estoppel, or otherwise. Without limiting the foregoing, nothing in this Agreement grants by implication, estoppel, or otherwise, any right, title, or interest in, to, or under any patents owned or controlled by the Company, Topcon or any of their Affiliates other than Licensed Patents. All rights, titles, and interests not specifically and expressly granted by the Company, Topcon or their Affiliates hereunder are hereby reserved. For the avoidance of doubt, the Licenses granted to Acquiror hereunder shall not be sublicensed or transferred to any Third Party without the prior written consent of Topcon, which consent shall not be unreasonably withheld with respect to sublicenses.

 

5.2       Disposals and Waivers. Notwithstanding anything herein to the contrary, in the event that Topcon or its Affiliates determine that any of the Licensed Patents to which the License relates are not necessary for Topcon or its Affiliates at any time after the Closing, Topcon (or any of its Affiliates) may, in its sole discretion, dispose of or waive any such Licensed Patents, and Acquiror hereby expressly agrees to such right of Topcon to dispose or waive any such Licensed Patents; provided that Topcon shall send a written notice to Acquiror to that effect not less than thirty (30) days prior to the date of disposal or waiver to the extent practicable; provided, further, that Acquiror shall have the right to request that Topcon to, but Topcon shall not be obligated to, continue maintaining any such Licensed Patents, in each case at Acquiror’s request and expense, and upon receipt of such request, the Parties shall discuss in good faith with an aim to agree on such matters.

 

5.3       Non-Assertion. On and after the Closing, and subject to the terms and conditions of this Agreement, the Company, on behalf of itself and its Affiliates and their respective successors and assignees (including any future successors or assignees of the Licensed IP (other than the Licensed Patents)), agrees forever and irrevocably not to assert, or to cause or direct any Third Party to assert, against Acquiror any claim or counterclaim of infringement, misappropriation or other violation of the Licensed IP (other than the Licensed Patents),   in connection with the development, use, manufacture, commercialization or other exploitation of the Licensed Products hereunder; provided, however, that this Section 5.3 shall be expressly limited to any such claims relating to Licensed Products that (i) were or are designed by Acquiror or any of its Affiliates (or, prior to the Closing, the Company or any of its Affiliates) and (ii) are sold, offered for sale, or distributed under a trademark owned or controlled by Acquiror or any of its Affiliates. All rights, titles, and interests not specifically and expressly granted by the Company, Topcon or their Affiliates hereunder are hereby reserved.

 

5.4       License Term. The license granted in Section 5.1 shall expire on a Patent-by-Patent basis upon the expiration of the term of the applicable Licensed Patent. The covenant not to sue set forth in Section 5.2 is, for clarity, irrevocable and perpetual.

 

Article VI

CONDUCT OF COMPANY BUSINESS

 

6.1       Conduct of Company Business. During the Pre-Closing Period, except as otherwise consented by Acquiror in writing (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall conduct the Business in the ordinary course of business and use its commercially reasonable efforts to (i) maintain and preserve intact its current Business organization, operations, goodwill and relationships of its Business Employees, (ii) maintain the Transferred Assets and Licensed IP in good operating condition, subject to normal

 

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wear and tear, and (iii) preserve the relationships of the Business with Customers, suppliers and others having business dealings with them.

 

6.2       Restrictions on Company Activities. During the Pre-Closing Period, except (i) as expressly contemplated by this Agreement, (ii) with the prior consent of Acquiror (which consent will not be unreasonably withheld, conditioned or delayed), and (iii) as expressly set forth in Section 6.2 of the Disclosure Schedule, the Company shall not, without the prior written consent of Acquiror (which consent will not be unreasonably withheld, conditioned or delayed):

 

(a)       cause or permit any modifications, amendments or changes to their organizational documents (including, without limitation, the memorandum of association and articles of association) that would delay or impede the consummation of the Transactions.

 

(b)       (i) sell, divest, exclusively License or assign to any Person, or enter into any agreement to sell, divest, exclusively license or assign to any Person, any Transferred IP or Licensed IP; (ii) License any Business Products to third parties other than customer agreements in the form of the applicable Standard Form IP Contract that are entered into in the ordinary course of business consistent with past practice; or (iii) amend, modify or extend any agreement for the License, sale or other distribution of Business Products (other than amendments, extensions or modifications that are entered into in the ordinary course of business consistent with past practice and which do not change pricing under such agreements);

 

(c)       other than in the ordinary course of business consistent with past practice, assign, transfer, lease, sell, hypothecate, pledge or subject to any Lien not in existence as of the Agreement Date (other than any Permitted Liens) any Transferred Asset;

(d)permit any Transferred Intellectual Property Rights to lapse or enter into the public domain; (e)enter into, terminate or materially extend, amend, modify or waive any right with respect

to any Material Contract or any Transferred Contract, except for (i) purchase orders or sales orders entered

in the ordinary course of business, (ii) the sublicense agreement with Quantel Medical in substantially the form of the draft which has been Made Available to Acquiror and (iii) the Stanford Agreement in form and substance as Made Available to Acquiror;

 

(f)         settle any Action relating to the Transferred Assets, the Licensed IP or the Business, except for cash-only settlements made in the ordinary course of business consistent with past practice which would constitute Company Liabilities;

 

(g)       commence any Action relating to the Business, the Transferred Assets or the Licensed IP other than (A) for the routine collection of amounts owed or (B) in such cases where the failure to commence litigation could have a Material Adverse Effect;

 

(h)       materially increase the salary, bonus or other compensation or benefits payable to any Business Employee, or accelerate the vesting or payment or provisions thereof or agree to increase or accelerate the vesting or payment or provision thereof, whether pursuant to an Employee Plan or otherwise, other than as required by Law or a Labor Agreement or by any plans, programs or agreements existing on Agreement Date;

 

(i)         terminate the employment or other service, change the title, office or position (other than changes pursuant to Contracts existing as of the Agreement Date and made in the ordinary course of business consistent with past practices), or materially reduce the responsibilities of, any Business Employees under any employment or service agreement of, any Business Employee in effect as of the

 

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Agreement Date, except to the extent such termination relates to termination “for cause,” “good reason”, “constructive dismissal” or other similar construct under any such employment agreement or service agreement;

 

(j)         transfer any Business Employee from working within the Business, or induce any Business Employee to resign his/her employment or other service in the Business, or agree to transfer any Business Employee from the Business, or employ, engage or transfer any person who is not a Business Employee as of the date of this Agreement to work in or for the Business;

 

(k)       announce, implement or effect any reduction in labor force, lay-off, early retirement program, severance program or other program or effort concerning the termination of employment or service of any Business Employee, except as separately agreed by the Parties;

 

(l)enter into any collective bargaining agreement or similar labor agreement in respect of any

Business Employees;

 

(m)incur or assume any liabilities or obligations that would constitute a Post-Closing Acquiror

Liability, other than in the ordinary course of business consistent with past practice;

 

(n)       send any written communications (including electronic communications) to Business Employees regarding this Agreement or the Transactions or make any representations or issue any communications to Business Employees that are inconsistent with this Agreement or the Transactions, including any representations regarding offers of employment or other service from Acquiror, except to the extent such communications (i) are made pursuant to instructions or request from Acquiror or its Representatives, (ii) are necessary pursuant to applicable Law, or (iii) are reasonably necessary for the Company to fulfill its obligations under this Agreement;

 

 

 

 

(p)       with respect to the Business, Transferred Assets or IP Licenses, enter into any Contract with, or effect any transaction with, any Interested Party or amend, modify, or otherwise alter any Contract with any Interested Party in effect as of the Agreement Date, except as expressly contemplated under this Agreement; or

 

(q)       take, commit, or agree in writing or otherwise to take, any of the actions described clause through of this Section 6.2, or any other action that would (i) prevent the Company from performing, or cause the Company not to perform, its covenants or agreements hereunder or (ii) cause or result in any of its representations and warranties contained herein being untrue or incorrect in any material respect.

 

Article VII

APPROVALS AND NON-SOLICITATION AGREEMENTS

 

7.1       Termination of Discussions. As of the Agreement Date, the Company shall, and shall cause its Representatives to, immediately terminate and cease and suspend any existing communication, activities, discussions or negotiations (including termination of access to the VDR) with any Person or entity (other than Acquiror or its Representatives) regarding (i) any transfer or sale of all or substantially all of the assets of the Business that would conflict with the Asset Purchase or (ii) any joint venture or other strategic transaction with or involving the Business, the Transferred Assets or the Licensed IP (each of the transactions described in the preceding clauses (i) and (ii) being referred to herein as an “Alternative Transaction”).

 

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7.2No Solicitation. The Company shall not, and shall cause its Representatives not to, directly or indirectly, at any time during the Pre-Closing Period:

 

(a)initiate contact with, solicit, seek, or facilitate any inquiry from any Person or entity (other than Acquiror and its Representatives) in connection with an Alternative Transaction; or

 

(b)enter into any discussion or negotiation with any Person or entity (other than Acquiror and its Representatives) in connection with an Alternative Transaction.

 

7.3     Notice of Alternative Transaction Proposals. In the event that the Company or any of its Representatives shall receive, prior to the Closing Date or the termination of this Agreement, any written offer or proposal that would to lead to an Alternative Transaction (each, a “Solicitation”), the Company shall promptly (and in any event within three (3) days) notify Acquiror of the existence of the Solicitation to the extent permissible under confidentiality obligations owed by the Company.

 

Article VIII ADDITIONAL AGREEMENTS

 

8.1       Third Party Consents. The Company shall use its commercially reasonable efforts to obtain all necessary consents, waivers and approvals of any third parties to any Transferred Contract as are required thereunder in connection with the Transactions in order for such Contract to remain in full force and effect following the Transactions. Such consents, modifications, waivers and approvals shall be in a form acceptable to Acquiror (acting reasonably). In the event that any of the Transactions do not close for any reason, none of the Parties nor any of their Affiliates or any of their Representatives shall have any liability to each other Party or any other Person for any costs, claims, liabilities or damages resulting from the Company seeking to obtain such consents, modifications, waivers and approvals.

 

8.2       Commercially Reasonable Efforts to Close. Subject to the terms and conditions provided in this Agreement, each of the parties hereto shall use reasonable best efforts to take promptly, or cause to be taken promptly, all actions, and to do promptly, or cause to be done promptly, all things necessary, proper or advisable under applicable Laws to consummate and make effective the Transactions as promptly as practicable, including by using commercially reasonable efforts to take all action necessary to satisfy all of the conditions to the obligations of the other party or parties hereto to effect the Transactions.

 

8.3Ellex Dispute.

 

(a)Subject to the terms and conditions of this Agreement, including without limitation Section

8.3(b) below, the Parties acknowledge and agree that, as of the Agreement Date, the Company has entered into a settlement with Ellex Medical Lasers Limited and/or one or more of its Affiliates (“Ellex”) with

respect to a dispute pursuant to which the Company has brought an Action against Ellex alleging patent infringement in respect of one or more of the patents licensed to the Company from Stanford pursuant to

the Stanford Agreement, among others (such Action, the “Ellex Dispute” and such settlement, the “Ellex

Settlement”). In connection with the foregoing, the Parties agree that (A) the Company and/or its Affiliates shall be entitled to, and Acquiror and its Affiliate shall not interfere in any respect with the Company and/or

its Affiliates’ right to, receive any proceed, compensation or any other payment made by Ellex in connection

with the Ellex Settlement, including settlement payment, and (B) Acquiror shall reasonably cooperate with the Company and its Affiliates (at the Company’s expense) in connection with the Ellex Settlement, at the

request and expense of the Company; provided, in each case (A)-(B), that the Company has complied with,

and hereby agrees to comply with, all terms and conditions of the Stanford Agreement applicable to

“OptiMedica”, mutatis mutandis, including by obtaining Stanford’s consent or agreement as required and

 

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paying to Stanford portions of all proceeds, compensation or other payments made by Ellex that are or become payable to Stanford in accordance with the Stanford Agreement.

 

(b)         The Company confirms that the Ellex Settlement includes a dismissal of all of Ellex’s counterclaims against the Company with prejudice, with such release precluding any claim against Acquiror.

 

8.4Employee Matters.

 

(a)       Proprietary Information and Inventions Assignment Agreements.   The Company shall, prior to the Closing, reasonably cooperate with Acquiror to assist Acquiror to cause each Business Employee of the Company enter into and execute an employee proprietary information agreement or a consultant proprietary information agreement, as applicable, provided that (i) forms of such agreements shall be reasonable and customary, and (ii) Acquiror shall provide opportunities for the Company to review such agreements in advance. For clarity, Acquiror shall bear any and all costs and expenses to be incurred in connection with Employee Proprietary Information Agreement and/or Consultant Proprietary Information Agreement.

 

(b)Intentionally Omitted.

 

(c)Transferring Employees.

 

(i)         Acquiror shall, or shall cause an Affiliate of Acquiror to, offer employment effective on the Closing Date, to certain Business Employees identified by Acquiror, including all such Business Employees who are absent due to vacation, family leave, short-term disability or other approved leave of absence (the Business Employees who accept such employment and commence employment on the Closing Date, the “Transferred Employees”).

 

(ii)       For a period of twelve (12) months following the Closing Date, Acquiror shall, or shall cause its Affiliates to, (i) not reduce or cause to be reduced, the base salary, base wage or target bonus opportunities (excluding equity-based compensation) of each Transferred Employee from the level in effect for such Transferred Employees from base salary, wages or bonus opportunities provided by the Company immediately prior to the Closing, (ii) provide the Transferred Employees with employee benefits, including retirement and welfare benefits (“Acquiror Plans”) that are no less favorable in the aggregate than those provided by the Company immediately prior to the Closing, and (iii) provide the Transferred Employees with severance benefits that are no less favorable in the aggregate than the practice, plan or policy in effect for such Transferred Employee immediately prior to the Closing. With respect to any such Acquiror Plans for the benefit of any Transferred Employee, effective as of the Closing, Acquiror shall, or shall cause its Affiliate to, recognize all service of the Transferred Employees with the Company, as if such service were with Acquiror, for vesting, eligibility and accrual purposes; provided, however, such service shall not be recognized to the extent that (x) such recognition would result in a duplication of benefits or (y) such service was not recognized under the corresponding Acquiror Plan. For purposes of determining eligibility to participate, vesting and entitlement to benefits where length of service is relevant under an Acquiror Plan, to the extent permitted by applicable Law, and subject to any applicable break-in-service or similar rule, Acquiror will use commercially reasonable efforts to provide or cause to be provided service credit under the Acquiror Plan to each Transferred Employee for his or her period of service with the Company prior to the Closing, except where doing so would cause a duplication of benefits.

 

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(iii)     Acquiror will use commercially reasonable efforts to cause any pre-existing condition, actively-at-work, or similar limitations, eligibility waiting periods, and evidence of insurability requirements under any Acquiror Plan that is a group health plan to be waived with respect to Transferred Employees and their eligible dependents in accordance with applicable Law and to provide credit for any co-payments, deductibles, out-of-pocket expenses, and offsets (or similar payments) made during the plan year of such Acquiror Plan in which the Closing occurs (to the extent the Closing occurs other than on the last day of the plan year) for purposes of satisfying any applicable co-pay, deductible, out-of-pocket, offset or similar requirements under the Acquiror Plan under which Transferred Employee is eligible to participate after the Closing.

 

(d)       Cooperation with Acquiror. The Company shall, on or prior to the Closing, use its commercially reasonable efforts to cooperate with Acquiror with respect to communication of offers of employment to the Business Employees, including by giving Acquiror and its Representatives reasonable access to such Business Employees, to the extent permitted by applicable Law. Further, without the prior written consent of Acquiror, the Company shall not (i) solicit or transfer any Business Employee to Topcon or its Affiliates other than the Company, or (ii) pay any severance or other termination payment (except as owed pursuant to any Contract in effect on or prior to the Agreement Date) to any Business Employee prior to the Closing. The Company shall be responsible for ninety percent (90%) of severance costs owed pursuant to existing Contracts for all Business Employees employed at the Facility and not retained by Acquiror immediately after the Closing, and Acquiror shall be responsible for the remaining ten percent (10%) of such costs.

 

(e)       Termination of Employee Plan. Effective as of the Closing, the Parties acknowledge and agree that the Transferred Employees shall cease active participation in the Employee Plan. The Company shall remain liable for all eligible claims for benefits under the Employee Plan that are incurred by the Transferred Employees prior to the Closing. For purposes of this Agreement, the following claims shall be deemed to be incurred as follows: (i) life, accidental death and dismemberment, short-term disability, and workers’ compensation insurance benefits, on the event giving rise to such benefits; (ii) medical, vision, dental, and prescription drug benefits, on the date the applicable services, materials or supplies were provided; and (iii) long-term disability benefits, on the eligibility date determined by the long-term disability insurance carrier for the plan in which the applicable Transferred Employee participates.

 

(f)       No Employment Commitment or Plan Amendments. Unless expressly stated in this Agreement, no provision of this Agreement is intended, or shall be interpreted, to provide or create any third party beneficiary rights or any other rights of any kind or nature whatsoever in any Business Employee or other employee, consultant, contractor or any other Person, including any rights of employment or other service for any specified period and/or any employee benefits, in favor of any Person, union, association, Business Employee, or other employee, consultant or contractor or any other Person, other than Acquiror and the Company and their respective successors and permitted assigns, and all provisions of this Agreement will be personal solely among such parties. In addition, no provision of this Agreement is intended, or shall be interpreted, to establish, amend or modify any term or condition of any employee related plan, program or policy of the Company.

 

(g)       Legal Compliance. Acquiror shall, and shall cause its Affiliates to, comply with all applicable Laws in connection with its solicitation, hiring or retention of any Employees or Business Employees. Acquiror acknowledges and agrees that any Loss arising from the retention, solicitation or hiring of the Transferred Employees shall be solely the responsibility of Acquiror, and under no circumstances shall the Company or any of its Affiliates be responsible for any such matters.

 

8.5COBRA Continuation Coverage. The Company shall be solely responsible for providing continuation coverage under COBRA to those individuals who are M&A qualified beneficiaries (as defined in

 

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Treasury Regulations Section 54.4980B-9, Q&A-4(a)) with respect to the transactions contemplated by this Agreement (collectively, the “M&A Qualified Beneficiaries”). The Company shall indemnify, defend and hold harmless Acquiror and its Affiliates for, from and against any and all claims, liabilities, losses, costs and expenses (including attorney’s fees) relating to, arising out of, or resulting from any and all COBRA obligations, liabilities and claims related to M&A Qualified Beneficiaries and all other qualified beneficiaries (as defined in Code Section 4980B(g)(1)) with respect to the Company’s group health plans.   The Company further agrees and acknowledges that in the event that the Company ceases to provide any group health plan to any employee prior to the expiration of the continuation coverage period for all M&A Qualified Beneficiaries (pursuant to Treasury Regulations Section 54.4980B-9, Q&A-8(c)), then the Company shall provide Acquiror with (a) written notice of such cessation as far in advance of such cessation as is reasonably practicable (and, in any event, at least thirty (30) days prior to such cessation), and (b) all information necessary or appropriate for Acquiror to offer continuation coverage to such M&A Qualified Beneficiaries.

 

8.6       Tax Matters. Except as set forth in this Section 8.6, the Company will be responsible for the preparation and timely filing of all Tax Returns of the Company and shall have the authority to make any election available and collect any tax refund with respect to such Tax Returns. Such Tax Returns shall be true, complete and correct and prepared in accordance with applicable Law. The Company will be responsible for and will pay when due all Taxes reflected on such Tax Returns. In the case of any real or personal property Taxes or similar ad valorem Taxes relating or attributable to Transferred Assets that are reported on a Tax Return covering a period commencing on or before the Closing Date and ending after the Closing Date (“Straddle Period Taxes”), any such Straddle Period Taxes shall be prorated between Acquiror, on the one hand, and the Company, on the other, on a per diem basis. The party required by applicable Law to pay any such Straddle Period Taxes (the “Paying Party”) shall prepare and timely file the Tax Returns with respect thereto in the time and manner required by Law and shall timely pay all Taxes reflected on such Tax Returns. To the extent such payment exceeds the obligation of the Paying Party hereunder, the Paying Party shall be entitled to be reimbursed by the other party (the “Non-Paying Party”) for the Non-Paying Party’s share of such Straddle Period Taxes within ten (10) Business Days of receipt of reasonably satisfactory evidence of the amount of such Straddle Period Taxes.

 

8.7       Expenses. Whether or not the Transactions are consummated, except as specifically provided in this Agreement or any Related Agreement, each party shall be responsible for its own expenses and costs that it incurs (whether paid prior to, at or after any Closing) with respect to the negotiation, execution, delivery and performance of this Agreement and the Related Agreements.

 

8.8       Release of Liens. The Company shall, at or prior to the Closing, file or cause to be filed all agreements, instruments, certificates and other documents, in form and substance reasonably satisfactory to Acquiror, that are necessary to effect the release of all Liens on the Transferred Assets, if any.

 

8.9       Access to Information. From the Agreement Date until the Closing, the Company shall afford Acquiror and its Representatives reasonable access to, upon reasonable notice and during normal business hours and in such manner so as not to interfere with the conduct of the Business, (i) the assets, properties, Books and Records and Contracts of the Company relating to the Transferred Assets and the Business, including all Transferred IP and Licensed IP, (ii) all Business Employees as identified by Acquiror and consented to by the Company in writing, and (iii) all other information relating to the Transferred Assets, Business Employees, Licensed IP and the Business (subject to restrictions imposed by applicable Law) of the Company as Acquiror may reasonably request; provided, however, that the Company shall not be required to disclose any information or allow access to any such assets, properties, Books and Records, Contracts, Transferred IP, Licensed IP or information to the extent that the Company reasonably determines such information constitutes information (i) that any applicable Law or Order requires the Company to restrict or prohibit access to such information, (ii) access to which may jeopardize the Company’s preservation of attorney-client privilege, work product, or other applicable privilege applicable to such documents or information (provided, that the parties shall use commercially reasonable efforts to take such reasonable measures as will permit the compliance with such obligations in a manner that avoids any such harm or

 

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consequence), (iii) that relates to a threatened or filed Action involving the Company, on the one hand, and Acquiror, on the other hand, or (iv) access to which may contravene any applicable Law, fiduciary duty or binding agreement entered into prior to the Agreement Date. Notwithstanding anything herein to the contrary, neither Acquiror nor any of its Representatives shall, without the prior written consent of the Company, make inquiries of Persons having business relationships with the Company (including suppliers and customers) regarding the Company or such business relationships.

 

8.10Notification of Certain Matters.

 

(a)       The Company shall give prompt notice to Acquiror of: (i) the occurrence or non-occurrence of any event that causes any representation or warranty of the Company contained in this Agreement to be untrue or inaccurate at or prior to the Closing Date, (ii) any failure of the Company to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder and (iii) the occurrence of a Material Adverse Effect on or prior to the Closing; provided, however, that the delivery of any notice pursuant to this Section 8.10(a) shall not (a) limit or otherwise affect any remedies available Acquiror or (b) constitute an acknowledgment or admission of a breach of this Agreement.

 

(b)       Acquiror shall give prompt notice to the Company of: (i) the occurrence or non-occurrence of any event that causes any representation or warranty of Acquiror contained in this Agreement to be untrue or inaccurate at or prior to the Closing Date, and (ii) any failure of Acquiror to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 8.10(b) shall not (a) limit or otherwise affect any remedies available to the Company or (b) constitute an acknowledgment or admission of a breach of this Agreement.

 

8.11     Post-Closing Manufacturing Cooperation. The parties acknowledge that the Company is currently leasing the Facility from Michael L. Sanders and Michelle Sheehan-Sanders (the “Livermore Lessor”) pursuant to the Standard Industrial/Commercial Single-Tenant Lease – Net between the Company and the Livermore Lessor dated April 4, 2016 (as amended), and the Company plans to sublease the Facility to Acquiror pursuant to the terms and conditions set forth in a sublease agreement to be entered into between the Parties on or around the date hereof and in substantially the form of Exhibit C hereto (“Livermore Sublease”), such sublease to become effective upon the Closing. Company shall permit Acquiror to manufacture the Business Products at the Facility for a period of one (1) year following the Closing pursuant to and subject to the terms of the Livermore Sublease; provided, that Topcon or its Affiliate, on the one hand, and Acquiror, on the other hand, shall each bear fifty percent (50%) of all leasing costs for the Facility during such period. Acquiror shall pay to Topcon (or its designee) a lump-sum, upfront payment in an amount equal to fifty percent (50%) of the cost of lease for the Facility for such one (1) year term, and provided, further, that the actual timing and method of payment for such costs shall be discussed and agreed by the parties separately in good faith. Company shall cease use of its manufacturing facility at 2526 Qume Drive, Suite 16, San Jose, California, and shall bear all costs associated with termination, including but not limited to any severance payments for Non-Retained Employees at such facility. The timing and method of payment for such costs shall be discussed and agreed by the Parties separately in good faith.

 

8.12     Post-Signing Contract. If the Company or any of its Affiliates enters into, between the Agreement Date and the Closing Date, any material Contract that is (or will be) used in, held for us in, or relates to, the Business, the Transferred Assets or the Business Employees (a “Post-Signing Business Contract”), the Company shall promptly deliver a notice to Acquiror that the Company has entered into such Post-Signing Business Contract, which notice shall include a copy of such Contract and indicate whether or not such Contract is (or will be) used in, held for us in, or relates to, the Business, the Transferred Assets or the Business Employees and (ii) with respect to any Post-Signing Business Contract that is (or will be) used in, held for us in, or relates to, the Business, the Transferred Assets or the Business Employees, Acquiror shall be entitled to designate (by written notice delivered

 

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to the Company), whether such Post-Signing Business Contract will constitute a “Transferred Contract” (any such contract so designated by Acquiror, an “Additional Transferred Contract”).

 

8.13     Parts. For a period of seven (7) years following the Closing, Acquiror agrees to continue to provide, on a substantially similar basis, the services currently provided by the Company with respect to the supply of spare parts and manufacturer repair services for the Business Product (including with respect to any such products already delivered to users). The obligation of Acquiror under this Section 8.15 shall survive the termination of this Agreement.

 

8.14     Post-Closing Sales. Notwithstanding anything herein to the contrary, during the period starting from the Closing Date and ending on the date on which the Exclusive Distribution Rights becomes effective, the Company and its Affiliates shall have the right to continue to sell and distribute products manufactured by the Company (including the Business Product), and under no circumstances shall Acquiror or its Affiliates take any action to interfere with or otherwise hinder such rights of the Company and its Affiliates under this Section 8.14. Notwithstanding the foregoing, the Company and its Affiliates shall be permitted to, and nothing shall prohibit or restrict the Company’s and its Affiliate’s ability to, sell and distribute for a period of (i) three (3) months following the Closing Date, or (ii) if longer, until such time that Acquiror obtains the approval of the relevant Governmental Entity to sell and market the Business Product in the United States the products manufactured by the Company in accordance with any Contract in effect as of the Closing Date.

 

8.15Non-Solicitation and Non-Competition.

 

(a)       Noncompetition. For a period of three (3) years after the Closing Date, each of Topcon and the Company will not, directly or indirectly, engage in any business directly in competition with the Business as operated as of the Closing Date (collectively, a “Competing Business”), provided, however, that nothing herein shall prohibit or restrict Topcon or any of its Affiliates from purchasing or otherwise acquiring up to five percent (5%) of any class of the securities of any Person if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934, as amended. For clarification, the restrictions in this Section 8.15 shall not apply to the activities of Topcon or its Affiliates to the extent such activities are required or authorized to be performed in connection with the Manufacturing Services Agreement, the Distribution Agreement or in connection with the operations of the Company (other than the Business) as of the Agreement Date. For further clarification, this Section 8.15(a) is not intended to restrict or limit, and shall not be deemed to restrict or limit, any of the obligations of Topcon or its Affiliates (or any of the rights of Acquiror) under Section 2.4 of the Distribution Agreement.

 

(b)       Nonsolicitation and Nonhire. For a period of two (2) years after the Closing Date, each of Topcon and the Company will not, directly or indirectly solicit or seek to hire any Person who was an employee of the Company who was directly engaged in the Business immediately prior to the Closing (each an “Excluded Employee”), provided that nothing herein shall restrict Topcon or its Affiliates from hiring any such Excluded Employee who (x) has terminated its employment relationship with Acquiror or the Company without any direct or indirect encouragement or solicitation by Topcon or any of its Affiliates to terminate its employment or (y) responds to a bona fide job advertisement of general circulation made by Topcon or any of its Affiliates (whether posted on the internet or in a newspaper, magazine or other publication).

 

(c)       Modification of Covenant. If a final judgment of a court or tribunal of competent jurisdiction determines that any term or provision contained in this Section 8.15 is invalid or unenforceable, then the Parties agree that the court or tribunal will have the power to reduce the scope, duration or geographic area of the term or provision, to delete specific words or phrases or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest

 

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to expressing the intention of the invalid or unenforceable term or provision. This Section 8.15 will be enforceable as so modified after the expiration of the time within which the judgment may be appealed. Each of Topcon and the Company acknowledges this Section 8.15 is reasonable and necessary to protect and preserve the Acquiror’s and its Affiliates’ legitimate business interests.

 

Article IX

POST-CLOSING INDEMNIFICATION

 

9.1       Survival.

 

(a)       Company Representations and Warranties. The representations and warranties of the Company set forth in this Agreement or in any certificate or other instrument delivered by or on behalf of the Company in connection herewith shall survive until 11:59 p.m. (Prevailing Pacific Time) on the date that is eighteen (18) months following the Closing Date (the date of expiration of such period, the “Expiration Date”); provided, however, (A) that the representations and warranties of the Company set forth in Section 3.11 (Intellectual Property) and Section 3.24 (Regulatory Matters) (the “Company Specified Representations”) shall survive until 11:59 p.m. (Prevailing Pacific Time) on the date that is twenty-four (24) months following the Closing Date, and (B) that the representations and warranties of the Company set forth in (i) Section 3.1 (Organization and Good Standing), (ii) Section 3.2 (Authority and Enforceability) (iii) Section 3.3 (Title and Condition of Transferred Assets and (iv) Section 3.22 (No Brokers), in each case, as applicable (collectively, the “Company Fundamental Representations”)”) shall survive until the later of (i) 11:59 p.m. (Prevailing Pacific Time) on the date that is five (5) years following the Expiration Date, and (ii) 11:59 p.m. (Prevailing Pacific Time) on the date that is thirty (30) days after the expiration of the longest statute of limitations applicable to the subject matter of such representation or warranty (after giving effect to any waiver, mitigation, tolling or extension thereof); provided, further, that in the event of Fraud with respect to a representation or warranty of the Company, such representation or warranty shall survive indefinitely solely for the purpose of any claims arising out of such Fraud; provided, further, that any claims asserted in accordance with the procedures set forth in this Article IX prior to the Expiration Date or other applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty, and such claims shall survive until finally resolved.

 

(b)       Acquiror Representations and Warranties. The representations and warranties of Acquiror set forth in this Agreement or in any certificate or other instrument delivered by or on behalf of Acquiror in connection herewith shall survive until 11:59 p.m. (Prevailing Pacific Time) on the Expiration Date; provided, however, that (A) that the representations and warranties of Acquiror set forth in (i) Section 4.1 (Organization and Standing), (ii) Section 4.2 (Authority and Enforceability) and (iii) Section 4.4 (No Brokers), in each case, as applicable shall survive until the later of (i) 11:59 p.m. (Prevailing Pacific Time) on the date that is five (5) years following the Expiration Date, and (ii) 11:59 p.m. (Prevailing Pacific Time) on the date that is thirty (30) days after the expiration of the longest statute of limitations applicable to the subject matter of such representation or warranty (after giving effect to any waiver, mitigation, tolling or extension thereof); provided further, that in the event of Fraud with respect to a representation or warranty of Acquiror, such representation or warranty shall survive indefinitely; provided, further, that any claims asserted in accordance with the procedures set forth in this Article IX prior to the Expiration Date or other applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty, and such claims shall survive until finally resolved.

 

(c)       Covenants. The covenants of the parties to be performed prior to the Closing shall survive until the Expiration Date, and the covenants of the parties to be performed at or after the Closing shall survive until performed or otherwise in accordance with their terms; provided, further, that all such covenants of the parties to be performed at or after the Closing shall survive beyond the Expiration Date or other survival periods specified above with respect to any breach thereof if a claim is made hereunder

 

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prior to the expiration of the survival period for such covenant, in which case such covenant shall survive as to such claim until such claim has been finally resolved.

 

(d)       For the avoidance of doubt and notwithstanding anything to the contrary set forth herein, it is the intention of the parties hereto that the respective survival periods and termination dates set forth in this Section 9.1 supersede any applicable statutes of limitations that would otherwise apply to such representations, warranties and certifications.

 

9.2Indemnification Rights.

 

(a)       From and after and by virtue of the Closing, the Company (the “Company Indemnifying Party”) shall, and hereby agrees to, indemnify and hold harmless Acquiror and its Affiliates (the “Acquiror Indemnified Parties”) from and against all Losses paid, incurred, suffered or sustained by the Acquiror Indemnified Parties, or any of them (regardless of whether or not such Losses relate to any Third Party Claims), directly or indirectly resulting from, arising out of, or relating to any of the following:

 

(i)         (x) any breach of, or inaccuracy in, as of the execution and delivery of this Agreement or as of the Closing Date, any representation or warranty of the Company contained in this Agreement (other than the Company Specified Representations or Company Fundamental Representations), or any breach of, or inaccuracy in, any representation, warranty or certification in any certificate or other instrument delivered by, or on behalf of, the Company pursuant to this Agreement at the time that such certificate or other instrument is so delivered (other than to the extent such breach, inaccuracy or certification relates to a Company Specified Representation or Company Fundamental Representation) or (y) any Action, including the investigation, defense, prosecution or settlement thereof, if an adverse judgment in connection with such Action could give the Acquiror Indemnified Parties a claim for indemnification under clause (x) of this Section

9.2(a)(i);

 

(ii)       (x) any breach of, or inaccuracy in, as of the execution and delivery of this Agreement or as of the Closing Date, any Company Specified Representation, or any breach of, or inaccuracy in, any representation, warranty or certification in any certificate or other instrument delivered by, or on behalf of, the Company pursuant to this Agreement at the time that such certificate or other instrument is so delivered (to the extent such breach, inaccuracy or certification relates to a Company Specified Representation), or (y) any Action, including the investigation, defense, prosecution, or settlement thereof, if an adverse judgment in connection with such Action could give the Acquiror Indemnified Parties a claim for indemnification under clause (x) of this Section 9.2(a)(ii);

 

(iii)     (x) any breach of, or inaccuracy in, as of the execution and delivery of this Agreement or as of the Closing Date, any Company Fundamental Representation, or any breach of, or inaccuracy in, any representation, warranty or certification in any certificate or other instrument delivered by, or on behalf of, the Company pursuant to this Agreement at the time that such certificate or other instrument is so delivered (to the extent such breach, inaccuracy or certification relates to a Company Fundamental Representation), or (y) any Action, including the investigation, defense, prosecution, or settlement thereof, if an adverse judgment in connection with such Action could give the Acquiror Indemnified Parties a claim for indemnification under clause (x) of this Section 9.2(a)(iii);

 

(iv)       any breach, default in performance, or failure to perform or comply by the Company of any of its covenants or agreements set forth in this Agreement or any of the Related Agreements;

 

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(v)any Fraud on the part of the Company or any of its Representatives; and

 

(vi)any Company Liability.

 

(b)       From and after and by virtue of the Closing, Acquiror (the “Acquiror Indemnifying Party”, and together with the Company Indemnifying Party, the “Indemnifying Parties”) shall, and hereby agrees to, indemnify and hold harmless the Company and its Affiliates (the “Company Indemnified Parties”, and together with the Acquiror Indemnified Parties, the “Indemnified Parties”) from and against all Losses paid, incurred, suffered or sustained by the Company Indemnified Parties, or any of them (regardless of whether or not such Losses relate to any Third Party Claims), directly or indirectly resulting from, arising out of, or relating to any of the following:

 

(i)         (x) any breach of, or inaccuracy in, as of the execution and delivery of this Agreement or as of the Closing Date, any representation or warranty of Acquiror contained in this Agreement (other than the Fundamental Representations), or any breach of, or inaccuracy in, any representation, warranty or certification in any certificate or other instrument delivered by, or on behalf of, Acquiror pursuant to this Agreement at the time that such certificate or other instrument is so delivered, or (y) any Action, including the investigation, defense, prosecution or settlement thereof, if an adverse judgment in connection with such Action could give the Company Indemnified Parties a claim for indemnification under clause (x) of this Section 9.2(b)(i);

 

(ii)       any breach, default in performance, or failure to perform or comply by Acquiror of any of its covenants or agreements set forth in this Agreement or any of the Related Agreements;

 

(iii)any Fraud on the part of Acquiror or any of its Representatives; and

 

(iv)any Post-Closing Acquiror Liability.

 

(c)       This Article IX shall be the sole and exclusive remedy of the Indemnified Parties and their respective Representatives from and after the Closing for any and all claims or other matters arising under, out of, relating to, or in connection with this Agreement and the Transactions, including claims of any inaccuracy in or breach of any representation, warranty or covenant in this Agreement; provided, however, that (i) this Section 9.2(c) shall not be deemed a waiver by any party of any right to specific performance or injunctive relief, and (ii) nothing in this Agreement, including this Section 9.2(c), shall limit any claim or recourse of the Indemnified Parties against any Person under or in connection with Section 8.15 (Non- Competition and Non-Solicitation).

 

9.3General Indemnification Provisions.

 

(a)       Any payments made to an Indemnified Party pursuant to any indemnification obligations under this will be treated as adjustments to the Total Consideration for Tax purposes and such agreed treatment will govern for purposes of this Agreement, unless otherwise required by applicable Laws.

 

(b)       For purposes of this Article IX only, when determining the amount of Losses suffered by an Indemnified Party as a result of any breach or inaccuracy of a representation or warranty or any failure to perform or comply with any covenant or agreement applicable that is qualified or limited in scope as to materiality or Material Adverse Effect, such representation, warranty, covenant or agreement shall be deemed to be made without such qualification or limitation.

 

(c)       In the event that an Indemnified Party has suffered a Loss that would give rise to a right to be indemnified under more than one of the subclauses of Section 9.2(a), such Indemnified Party shall be

 

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entitled to make a claim for such Losses under any and all such subclauses; provided that, for the avoidance of doubt and notwithstanding anything to the contrary in this Agreement, in no event shall any Indemnified Party be entitled to any double recovery with respect to any particular Loss or claim or recovery with respect to any events or series of events arising from the same or substantially the same facts more than once. For the avoidance of doubt, nothing in this Agreement shall require any Indemnified Party to make any claim under this and, subject to the survival periods set forth in Section 9.1, no such claim shall be waived or otherwise prejudiced as a result of any delay in making such claim.

 

(d)       The amount of any Loss payable under this Article IX by an Indemnifying Party shall be net of any amounts actually recovered by the Indemnified Party from insurance policies.

 

(e)       Notwithstanding anything herein to the contrary, (i) nothing in this Article IX shall limit the liability of any party hereto for any breach of any representation, warranty, covenant or agreement contained in this Agreement, any Related Agreement or any certificates or other instruments executed and delivered by any party in connection with the Transaction if the Transaction does not close, and (ii) nothing in this Agreement shall limit the liability of any Person in connection with any claim of fraud or willful misconduct.

 

9.4Limitations on Indemnification. The indemnification provided for in Section 9.2 shall be subject to the following limitations:

 

(a)       The Indemnifying Party shall not be liable to the Indemnified Party for indemnification under Section 9.2(a) or Section 9.2(b), as the case may be, until the aggregate amount of all Losses in respect of indemnification under Section 9.2(a) or Section 9.2(b) exceeds $250,000 (the “Basket”), in which event the Indemnifying Party shall be required to pay or be liable for Losses from the first dollar. With respect to any claim as to which the Indemnified Party may be entitled to indemnification under Section

9.2(a) or Section 9.2(b), as the case may be, the Indemnifying Party shall not be liable for any individual or series of related Losses which do not exceed $50,000 (which Losses shall be counted toward the Basket).

 

(b)       The cumulative indemnification obligation of Company Indemnifying Party for any inaccuracy or breach of any of the representations or warranties under this Agreement shall in no event exceed $6,700,000 (the “Cap”). Without limiting the foregoing, and subject to Section 9.3, the cumulative amount of Losses for which the Company Indemnifying Party shall be liable in respect of (i) breach of Company Fundamental Representations under Section 9.2 shall not exceed the Cap in the aggregate; (ii) breach of Company Specified Representations under Section 9.2 shall not exceed $2,000,000 in the aggregate; and (iii) breach of any other representations or warranties hereunder,   shall not exceed

$1,340,000 in the aggregate; provided, that any amount of Losses indemnified under (i), (ii) or (iii) shall be counted toward the Cap. Notwithstanding the foregoing, any Losses arising from Fraud shall not be subject

to the Cap.

 

9.5Claim Procedures.

 

(a)       Subject to the limitations set forth in Section 9.4, if an Indemnified Party wishes to make a claim under this Article IX, such Indemnified Party shall deliver a written notice (an “Claim Notice”) to the Indemnifying Party (i) stating that an Indemnified Party has paid, incurred, suffered or sustained, or reasonably anticipates that it may pay, incur, suffer or sustain Losses, and (ii) to the extent reasonably available, specifying such Losses in reasonable detail, the date that each such Loss was paid, incurred, suffered or sustained, or the basis for such anticipated Losses, and, if applicable, the nature of the misrepresentation, breach of warranty or covenant or other indemnifiable matter. The Indemnified Party may update a Claim Notice from time to time to reflect any change in circumstances following the date thereof. A failure by an Indemnified Party to give complete, accurate, or, subject to the survival periods

 

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set forth in Section 9.1, timely notice of a Claim Notice will not affect the rights or obligations of any party hereunder. If a claim under this Article IX may be brought under different or multiple sections, clauses or sub-clauses of Section 9.2(a) or Section 9.2(b), as applicable (or with respect to different or multiple representations, warrants or covenants), then the Indemnified Parties shall have the right to bring such claim under any or each such section, clause, subclauses, representation, warranty or covenant (each a “Subject Provision”) that it chooses and the Indemnified Parties will not be precluded from seeking indemnification under any Subject Provision by virtue of the Indemnified Parties not being entitled to seek indemnification under any other Subject Provision.

 

(b)       If the Indemnifying Party shall not object in writing within thirty (30) days of delivery of a Claim Notice by delivery of a written notice of objection containing a reasonably detailed description of the facts and circumstances supporting an objection to the applicable claim (an “Claim Objection Notice”), such failure to so object shall be an irrevocable acknowledgment by the Indemnifying Party that the Indemnified Party is entitled to the full amount of the claim for Losses set forth in such Claim Notice (an “Unobjected Claim”), and the Indemnifying Party shall, within ten (10) Business Days following the date of such failure to so object, pay to the Indemnified Party the full amount of the Unobjected Claim.

 

(c)       In the event that the Indemnifying Party shall deliver a Claim Objection Notice in accordance with Section 9.5(b), the Indemnifying Party and Indemnified Party shall attempt in good faith to agree upon the rights of the respective parties with respect to each of such claims. If the Indemnifying Party and Indemnified Party should so agree, a memorandum setting forth such agreement shall be prepared and signed by both parties (a “Resolution Memorandum”), and the Indemnifying Party shall, within ten (10) Business Days following the date of execution of such Resolution Memorandum, pay to the Indemnified Party the agreed amount set forth in the Resolution Memorandum.

 

(d)       If the Indemnifying Party and Indemnified Party are unable to resolve an indemnification claim in accordance with the terms of this Section 9.5, then either the Company or Acquiror may elect for such Indemnification Claim to be finally settled by binding arbitration pursuant as provided in Section

9.5(e).

 

(e)       Binding arbitration between the parties shall be held in San Francisco, California (unless the Company and Acquiror agree otherwise) in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association and judgment upon the award rendered may be entered in any court having personal jurisdiction over the judgment debtor. Such arbitration shall be conducted by a single arbitrator chosen by mutual agreement of Acquiror and the Company. Alternatively, at the request of either Acquiror or the Company, before the commencement of arbitration, the arbitration shall be conducted by three independent arbitrators, none of whom shall have any competitive interests with or prior relationship with Acquiror or the Company. Acquiror and the Company shall each select one arbitrator. The two arbitrators so selected shall select a third arbitrator none of whom shall have any prior relationship with the Indemnified Party or the Indemnifying Party. The arbitrator or majority of the three arbitrators, as the case may be, shall set a limited time period and establish procedures designed to reduce the cost and time for discovery while allowing the parties an opportunity, adequate in the sole judgment of the arbitrator or majority of the three arbitrators, as the case may be, to discover relevant information from the opposing parties about the subject matter of the dispute. The arbitrator, or a majority of the three arbitrators, as the case may be, shall rule upon motions to compel or limit discovery and shall have the authority to impose sanctions for discovery abuses (but not attorneys’ fees and costs), to the same extent as a competent court of law or equity, should the arbitrator or a majority of the three arbitrators, as the case may be, determine that discovery was sought without substantial justification or that discovery was refused or objected to without substantial justification. The arbitrator shall only have the authority to submit a ruling on the matters relating to the Indemnification Claim in dispute. The decision of the arbitrator or a majority of the three arbitrators, as the case may be, shall be final, binding, and conclusive upon the Indemnified Parties and the

 

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Indemnifying Parties, respectively, and Acquiror or Company (on behalf of the Indemnifying Parties, as applicable) shall pay to the Company or Acquiror (on behalf of the Indemnified Parties, as applicable), within ten (10) Business Days thereafter, the full amount pursuant to which the Indemnified Party is entitled pursuant to such decision, if any. Such decision shall be written and shall be supported by written findings of fact and conclusions which shall set forth the award, judgment, decree or Order awarded by the arbitrator(s); provided, however, that the arbitrator shall not be permitted to award attorneys’ and experts fees and costs to the prevailing party (irrespective of whether such fees and costs are reasonably incurred). For the avoidance of doubt, each party shall bear its own costs and expenses (including attorneys’ and experts’ fees and costs) incurred in connection with any arbitration proceeding conducted pursuant to this Section 9.5(e). The fees and costs of the arbitrator(s) shall be borne as follows: 50% shall be borne by Acquiror and 50% shall be borne by the Company. Any meetings of the parties required in connection with the resolution of any dispute shall take place in San Francisco, California, unless the Company and Acquiror agree otherwise.

 

9.6       Third Party Claims.

 

(a)       In the event that an Indemnified Party or Indemnifying Party becomes aware of a third- party claim that constitutes a matter for which either (a) an Indemnified Party is entitled to indemnification, compensation or reimbursement under Section 9.2(a) or Section 9.2(b) if determined adversely to the Indemnified Party, or (b) would provide a basis for a claim under any of the matters indemnifiable under Section 9.2(a) or Section 9.2(b) (each, a “Third Party Claim”), the Indemnified Party shall (if it is the Person that becomes aware of such Third Party Claim) and the Indemnifying Party shall (if it is the Person that becomes aware of such Third Party Claim) promptly provide the other party with written notice regarding such Third Party Claim.

 

(b)       The Indemnifying Party shall, by written notice to the Indemnified Party delivered within thirty (30) days of receipt of notice of such Third Party Claim from the Indemnified Party, have the right to assume or conduct the defense and control of (including the right to prosecution and to settle or resolve), any Third Party Claim at its own expense and with counsel of its choice (the party that conducts the defense and prosecution of any such Third Party Claim, the “Controlling Party”, and the other party, the “Non- Controlling Party”). The Controlling Party shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Non-Controlling Party. The Parties shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section 11.3 (Confidentiality)) to each other Party copies of all information, pleadings, notices and communications with respect to any Third Party Claim to the extent that receipt of such documents does not affect any privilege relating to the disclosing Party, subject to Section 11.3 (Confidentiality), and shall be entitled to participate in (at its expense), but not to determine or conduct, any defense or prosecution of the Third Party Claim or settlement negotiations with respect to the Third Party Claim, it being understood that the Controlling Party shall control such defense.

 

(c)       Except with the consent of the Non-Controlling Party, which shall not be unreasonably withheld, conditioned or delayed, and which shall be deemed to have been given unless the Non-Controlling Party shall have objected within ten (10) days after a written request for such consent by the Controlling Party after reasonably sufficient consultation between the Parties, the Controlling Party may not agree to any settlement with respect to the Third Party Claim. Notwithstanding the foregoing, if a firm offer is made to settle a Third Party Claim without leading to Loss or the creation of a financial or other obligation on the part of the Indemnified Party, and such settlement provides, in customary form, for the unconditional release of the Indemnified Party from all liabilities and obligations with respect to such Third Party Claim (which form, to the extent practicable, shall be provided to the Indemnified Party in advance for its review and confirmation, which review and confirmation shall not be unduly withheld, conditioned or delayed),

 

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and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within ten (10) days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim.

 

9.7       General Release for Claims Relating to Retention, Solicitation or Hiring. Acquiror (a) acknowledges and agrees that any Loss arising from Acquiror or any of its Representatives’ retention, solicitation or hiring of any Employee or Business Employee in connection with the Transactions shall be solely the responsibility of Acquiror, including any hiring procedures or practices undertaken in connection with its consideration of the Transactions and accordingly, (b) on its own behalf, and on behalf of its Representatives, hereby fully and unconditionally releases and discharges the Company, Guarantor and their respective Affiliates and Representatives of and from any and all Losses arising from, related to, or in connection with, such matters.

 

Article X

PRE-CLOSING TERMINATION

 

10.1Termination of this Agreement. Except as provided in Section 10.2, this Agreement may be terminated and the Transactions abandoned at any time prior to the Closing:

 

(a)by mutual written agreement of the Company and Acquiror;

 

(b)       by Acquiror or the Company if the Closing Date shall not have occurred by the date that is forty-five (45) days after the Agreement Date (the “End Date”); provided, however, that the right to terminate this Agreement under this Section 10.1(b) shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Transactions to occur on or before such date and such action or failure to act constitutes breach of this Agreement;

 

(c)       by Acquiror or the Company if any Law or Order shall be in effect which has the effect of making the Transactions illegal or otherwise prohibits prevents consummation of the Transactions;

 

(d)       by Acquiror if it is not in material breach of its obligations under this Agreement and there has been a breach of or inaccuracy in any representation, warranty, covenant or agreement of the Company contained in this Agreement such that the conditions set forth in Sections 2.1(b)(ii)A and B would not be satisfied as of the time of such breach or inaccuracy and such breach or inaccuracy has not been cured within twenty (20) calendar days after written notice thereof to the Company; provided, however, that no cure period shall be required (A) for a breach or inaccuracy that by its nature cannot be cured or (B) if any of the conditions to the Closing in Section 2.1(b) for the benefit of Acquiror are incapable of being satisfied on or before the End Date; or

 

(e)       by the Company if it is not in material breach of its obligations under this Agreement and there has been a breach of or inaccuracy in any representation, warranty, covenant or agreement of Acquiror contained in this Agreement such that the conditions set forth in Sections 2.1(b)(iii)A and B would not be satisfied as of the time of such breach or inaccuracy and such breach or inaccuracy has not been cured within twenty (20) calendar days after written notice thereof to Acquiror; provided, however, that no cure period shall be required (i) for a breach or inaccuracy that by its nature cannot be cured or (ii) if any of the conditions to closing in Section 2.1(b) for the benefit of the Company are incapable of being satisfied on or before the End Date.

 

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10.2     Effect of Termination. In the event of termination of this Agreement pursuant to Section 10.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of Acquiror or the Company, or their respective Affiliates or Representatives or shareholders, if applicable; provided, however, that each party hereto and each Person shall remain liable for any Willful Breaches of this Agreement, Related Agreements or any certificate or other instruments delivered pursuant to this Agreement prior to its termination; and provided further, however, that, the provisions of Sections 8.7 (Expenses), 11.3 (Confidentiality), 11.4 (Public Disclosure), Article XI (General Provisions) and this Section 10.2 shall remain in full force and effect and survive any termination of this Agreement pursuant to the terms of this Article X. For purposes of this Agreement, “Willful Breach” means with respect to any representation, warranty, agreement, or covenant, any intentional or deliberate action or omission that constitutes a breach of such representation, warranty, agreement or covenant and that the breaching party actually knows or should reasonably be expected to know at the time is or would constitute a breach of such representation, warranty, agreement or covenant.

 

Article XI GENERAL PROVISIONS

 

11.1     Certain Interpretations; Definitions. When a reference is made in this Agreement to an Appendix, Exhibit or Schedule, such reference shall be to an Appendix, Exhibit or Schedule to this Agreement unless otherwise indicated. When a reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or a Section of this Agreement unless otherwise indicated. The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “or” is used in the inclusive sense of “and/or.” The terms “or,” “any” and “either” are not exclusive. The word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. The words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.” “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute, rule or regulation shall be deemed to refer to such statute, rule or regulation as amended or supplemented from time to time, including through the promulgation of applicable rules or regulations. References to any Contract are to that Contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof; provided that with respect to any Contract listed on any Schedules hereto, all such amendments, modifications or supplements must also be listed in the appropriate Schedule. References to any Person include the successors and permitted assignees of that Person. References from or through any date mean, unless otherwise specified, from but not including or through and including, respectively. References to one gender include all genders. When used herein, references to “$” or “dollar” shall be deemed to be references to dollars of the United States of America. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.   The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any Law or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document. All capitalized terms that are used but not defined herein shall have the respective meanings ascribed to such terms in Annex A.

 

11.2     Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial messenger or courier service, mailed by registered or certified mail (return receipt requested) or sent via electronic mail (with acknowledgment of receipt) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice or, if specifically provided for elsewhere in this Agreement, by email); provided, however, that notices sent by mail will not be deemed given until received:

 

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(a)if to Acquiror, to:

 

IRIDEX Corporation

1212 Terra Bella Avenue

Mountain View, CA 94043

Attention: Chief Executive Officer

Email: dbruce@iridex.com

with a copy (which shall not constitute notice) to: Wilson Sonsini Goodrich & Rosati P.C.

650 Page Mill Road

Palo Alto, California 94304

Attention: Philip Oettinger and Douglas Schnell

Email: poettinger@wsgr.com and dschnell@wsgr.com

 

111 Bauer Drive Oakland, NJ 07436. United States

Attention: Randy Samuels, Executive Vice President & General Counsel

E-mail: rsamuels@topcon.com

 

with a copy (which shall not constitute notice) to: Topcon Corporation

75-1 Hasunuma-cho, Itabashi-ku, Tokyo 174-8580, Japan

Attention: Kanako Koizumi

Senior Manager, Legal & Export Control Dept. General Administration & Legal Div.

Email: kkoizumi@topcon.com

with a copy (which shall not constitute notice) to: Nagashima Ohno & Tsunematsu

JP Tower, 2-7-2 Marunouchi, Chiyoda-ku, Tokyo 100-7036, Japan

Attention: Yutaka Kuroda

E-mail: yutaka_kuroda@noandt.com

 

All such notices and other communications shall be deemed to have been duly given or sent (i) one (1) Business Day following the date mailed if sent by overnight commercial messenger or courier service or five (5) Business Days following the date mailed if sent by other mail service, or (ii) on the date on which delivered personally or by electronic mail transmission, as the case may be, and addressed as aforesaid.

 

11.3Confidentiality.Each of the parties hereto hereby agrees that the information obtained in any investigation pursuant to Section 8.9 or any information obtained pursuant to the notice requirements of Section

8.10, or otherwise pursuant to the negotiation and execution of this Agreement or the effectuation of the transactions contemplated hereby, shall be governed by the terms of the Non-Disclosure Agreement entered into as of December

5, 2019 (the “Non-Disclosure Agreement”) between the Company and Acquiror. In addition, each of the parties

hereto acknowledge that by reason of the Company’s ownership the Businesses and Transferred Assets prior to the

Closing, and information provided to or learned by the Company in connection with the transactions contemplated

 

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hereby, the Company has acquired and will acquire confidential or non-public information of Acquiror (all such information, “Acquiror Confidential Information”), the disclosure of which could cause Acquiror substantial loss and damages that could not be readily calculated and for which no remedy at law would be adequate. Accordingly, and without limiting the foregoing, the Company covenants and agrees that the Company shall maintain the confidentiality of, and shall not disclose or use, any Acquiror Confidential Information except as permitted under the exceptions (which includes, without limitation, disclosures required pursuant to applicable Law and rules of stock exchange) under the Non-Disclosure Agreement. Upon the request of Acquiror at any time, the Company will either return or destroy, in its discretion, all copies of Acquiror Confidential Information in the Company’s possession or control, and upon request by Acquiror, will deliver written confirmation of such return or destruction to Acquiror; provided, that nothing shall require the deletion of any Confidential Information required to be maintained by the Company pursuant to applicable Law, cannot be readily removed pursuant to automatic back-up systems, or bona fide internal record-keeping policies (provided, that any Confidential Information so maintained by the Company shall be kept in confidence in accordance with the terms of the Non-Disclosure Agreement).

 

11.4     Public Disclosure. Acquiror and the Company shall not, and they shall cause their respective Affiliates and Representatives not to, issue any press release or make any public statement with respect to the subject matter of this Agreement or the Transactions without the prior written consent of the other party, except for any press releases or public statements that are required by applicable Law (including the rules and regulations of a stock exchange on which the shares of any party or its Affiliates are listed) or Order. If disclosure is required by applicable Law or Order: (a) it should not contain any reference to Acquiror or any of its Affiliates without Acquiror’s written consent; (b) it should not contain any reference to the Company or any of its Affiliates without the Company’s written consent; (c) it will otherwise contain only such information specifically required by applicable Law or Order; (d) the Company will use reasonable efforts to consult with Acquiror in advance prior to making such disclosure; and (e) Acquiror will use reasonable efforts to consult with the Company in advance prior to making such disclosure. Notwithstanding any provision of this Section 11.4, after the Closing, (i) the Company or its Affiliate may issue a press release in language appropriate for the region in which they operate that presents the Transactions as a strategic alliance with an objective to expand their respective businesses, provided that Acquiror and the Company shall discuss in good faith and agree as to the timing and contents of any such press release in advance, and (ii) Acquiror may make any announcement concerning the Business or the Transferred Assets, provided that Acquiror and Topcon shall discuss in good faith and agree as to the timing and contents of such announcement in advance; provided, however, that in no event shall Acquiror make any public statement with respect to the terms of this Agreement, any Related Agreement or the Transactions unless required by applicable Law or Order.

 

11.5     Amendment. This Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed on behalf of the party against whom enforcement is sought.

 

11.6     Extension and Waiver. At any time prior to any Closing, Acquiror, on the one hand, and the Company, on the other hand, may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations of the other party hereto, (b) waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the covenants, agreements or conditions for the benefit of such party contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party.

 

11.7     Assignment. This Agreement shall not be assigned by operation of law or otherwise except with the other party’s prior written consent.

 

11.8     Severability. In the event that any provision of this Agreement or the application thereof becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or

 

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circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

 

11.9     Specific Performance and Other Remedies. The Parties to this Agreement agree that, in the event of any breach or threatened breach by any other party hereto, of any covenant, obligation or other agreement set forth in this Agreement, (i) each party shall be entitled to seek, at its own costs and expenses, a decree or order of specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other agreement and an injunction preventing or restraining such breach or threatened breach, and (ii) no party hereto shall be required to provide or post any bond or other security or collateral in connection with any such decree, order or injunction or in connection with any related action or legal proceeding. Any and all remedies expressly conferred herein upon a party hereto shall be deemed to be cumulative with, and not exclusive of, any other remedy conferred hereby or by law or in equity upon such party, and the exercise by a party hereto of any one remedy will not preclude the exercise of any other remedy.

 

11.10   Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California without giving effect to any choice or conflict of law provision or rule.

 

11.11   Dispute Resolution. Any dispute, claim or controversy arising out of or relating to this Agreement or the other agreements and documents contemplated hereby or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in San Francisco, California, before one (1) arbitrator who shall be mutually appointed by the Parties. The arbitration shall be administered by JAMS (or any like organization successor thereto) pursuant to its JAMS International Arbitration Rules and Procedures. The arbitrator shall follow any applicable federal law and California state law in rendering an award. Judgment on the award may be entered in any court having jurisdiction. This clause shall not preclude the Parties from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction. The Parties further understand and agree that the arbitrator’s decision shall be final and binding to the fullest extent permitted by law and enforceable by any court having jurisdiction thereof. No discovery will be permitted in connection with the arbitration, unless it is expressly authorized by the arbitrator upon showing of substantial need by a Party seeking discovery.

 

11.12 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.12.

 

11.13   Entire Agreement. This Agreement, Annex A hereto, the Exhibits and Schedules hereto, the Disclosure Schedule, the Related Agreements, the Non-Disclosure Agreement and the documents and instruments and other agreements among the parties hereto referenced herein constitute the entire agreement among the parties hereto with respect to the subject matter of this Agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement, and are not intended to confer upon any other person any rights or remedies hereunder; provided, however, that, notwithstanding

 

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anything herein to the contrary, Article IX is intended to benefit the Indemnified Parties, each of whom is an express third party beneficiary thereof.

 

11.14   Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart. The exchange of a fully executed Agreement (in counterparts or otherwise) by electronic transmission in .PDF format or by facsimile shall be sufficient to bind the parties to the terms and conditions of this Agreement.

 

11.15   Guarantee by Guarantor.

 

(a)Guarantor represents and warrants to the Company as follows:

 

(i)         Guarantor is a corporation duly organized, validly existing and in good standing under the Laws of Delaware. Guarantor has all requisite power to own, lease and operate its properties and to carry on its business as currently conducted.

 

(ii)       Guarantor has the requisite corporate power and authority to enter into this Agreement and to perform its obligations under this Section 11.15. The execution and delivery by Guarantor of this Agreement and the performance by Guarantor of its obligations under this Agreement have been duly authorized by all necessary corporate action on the part of Guarantor, and no other corporate proceedings on the part of Guarantor are necessary to authorize the execution and delivery by Guarantor of this Agreement or the performance by Guarantor of its obligations under this Agreement in accordance with its terms. This Agreement has been duly executed and delivered by Guarantor and, assuming the due authorization, execution and delivery by the Company, constitutes the valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms except as such enforceability may be subject to (A) the Laws of general application relation to bankruptcy, insolvency, reorganization, moratorium and other similar Laws affecting or relating to creditors’ rights generally and (B) general principles of equity.

(iii)       Guarantor has sufficient assets to perform its obligations under this Section 11.15. (b)       Guarantor unconditionally guarantees timely and complete performance by the Company

of all of its duties and obligations contained in this Agreement, and the due and punctual payment by

Company of any amount that may become due and payable by it under this Agreement, if and when, and limited to the extent that, the Company defaults under such obligations, provided that any performance obligations of Guarantor as a result of its guarantee to Acquiror hereunder shall solely be provided in the form of financial payments. Guarantor waives any right to require that any resort be had by Acquiror to the assets or properties of the Company. The Acquiror shall provide to Guarantor (i) notice of the extent to which the Company has defaulted under such obligations and (ii) a demand for payment by Guarantor of the amount of such obligations, less the amount in respect thereof that the Company has paid in accordance with this Agreement through and including the date of such demand. Guarantor shall, within 30 Business Days of receipt of demand for payment from the Acquiror, pay such remaining amount by wire transfer of immediately available funds in accordance with this Agreement. Notwithstanding anything herein to the contrary, Guarantor reserves the right to assert defenses that the Company may have to payment or performance of any obligations guaranteed hereunder. The foregoing guarantee is a continuing guarantee and shall remain in full force and effect for so long as any such payments may become due and payable. The guarantee contemplated by this Section 11.15 shall apply regardless of any amendments, variations, alterations, waivers or extensions to this Agreement agreed to in writing by the Company whether or not Guarantor received notice of the same, and Guarantor hereby waives all need for notice of the same. Except

 

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as required by this Section 11.15, Guarantor waives any obligation of diligence, presentment, demand of performance or protest pursuant to this Section 11.15, other than any defenses that are available to the Company under this Agreement, including such limitations on indemnification provided under Article IX.

 

(c)Guarantor agrees to the terms set forth in Section 11.11 (Dispute Resolution) as if it was a

Party, solely with respect to any disputes arising from this Section 11.15.

 

(d)       Acquiror acknowledges and agrees that it shall not institute, and shall cause each of its Affiliates and their respective representatives not to institute, directly or indirectly, any Action or bring any other claim arising under, or in connection with, this Section 11.15, the Agreement, the Related Agreements or the Transactions, against Guarantor or its Affiliates, except for claims against Guarantor under and to the extent provided in this Section 11.16 and subject to the terms and conditions set forth herein. Recourse against the Guarantor solely with respect to the matters described in this Section 11.15(d) shall be the sole and exclusive remedy of Acquiror and all of its Affiliates against Guarantor in respect of any liabilities or obligations arising under, or in connection with, this Agreement or any of the other agreements contemplated hereby, or the Transactions, and such recourse shall be subject to the limitations described herein.

 

 

 

 

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